If you are buying a home, you will need to enter into a purchase and sale contract with the seller, which is typically a standard document prepared by the real estate agent. Nonetheless, it is important to have an experienced real estate attorney review the contract to ensure that your interests are protected.
Real Estate Contracts 101
There are a number of essential elements that must be included in a real estate contract. As you know, buying a home requires obtaining a mortgage loan to finance the purchase, and getting approved for a loan can be a difficult process that is often met with unexpected delays.
For this reason, it is important that the contract explicitly states that the deal is contingent on your loan application being approved. Additionally, specific terms of the loan, such as the term and interest rate should be set forth in the contract. This will allow you to back out of the deal if the lender rejects the application or changes the terms of the loan, which could make the purchase unaffordable. In short, including this provision will prevent the loss of your deposit.
Another factor to consider is the closing costs of the loan, such as title insurance fees, escrow fees, lender fees, attorney fees, recording fees, notary fees and other miscellaneous fees. If the seller is motivated, he or she may be willing to pay some or all of these fees in what is referred to as a seller’s concession.
With respect to the property, it is also important that the contract clearly states that appliances and fixtures, including the refrigerator, the dishwasher, washer/dryer, and even the chandelier in the foyer, are included in the purchase. Finally, the contract will also probably include a prospective closing date which should consider other contingencies such as your meeting loan commitment conditions or closing on the sale of an existing home.
After the contract is signed, you must also arrange for a home inspection. If any structural defects are found, or the heating, electric or plumbing systems are not operating properly, you have the right to cancel the deal, unless the seller agrees to lower the sales price or make the needed repairs.
Why You Need a Real Estate Attorney
Although many real estate purchases make it to the closing table without major problems, there are no guarantees and issues may arise that break the deal. Because buying a home is probably the largest financial transaction you will undertake, you are well advised to engage the services of an experienced real estate attorney before you sign on the dotted line.