contracts

Appraisal Contingency

  • Appraisal contingency verifies the offered purchase price against market value.

  • Typically set at 15 calendar days for appraisal completion but adjustable (10-21 days recommended).

  • If appraisal value is at or above the offered price (e.g., $250,000), proceed with the transaction.

Negotiation Options on Low Appraisal

  • If appraisal value is below the offer (e.g., $240,000), negotiate:

    • Request a price reduction from the seller.

    • Buyer can bring additional funds to cover the gap.

    • Seller may not reduce, but buyer can pay the difference if financially feasible.

Loan Contingency

  • Loan approval verification required, longer timeline than appraisal contingency (around 20-21 days).

  • Advise buyers against making large purchases during this period to avoid jeopardizing loan approval.

Cash Purchases

  • Cash transactions don't require loan approval or appraisal, but proof of funds is needed.

  • Best practice: provide proof of funds with offers.

Personal Property and Fixtures

  • Clearly list personal property items (e.g., appliances, decor) included in sale to avoid misunderstandings.

  • Failing to specify may result in disputes post-transaction.

Escrow Process

  • Indicates who handles the transaction (title company or attorney).

  • Earnest money deposit is held by the escrow company until closing.

Closing Details

  • Closing date agreed upon by buyer and seller.

  • Review IRS disclosures and title insurance requirements.

Due Diligence Period

  • Typically 10-15 days for inspections and reviews.

  • Conduct home inspections and negotiate repairs or cancel if issues arise.

Inspections

  • Recommended inspections: home, pest, roof, septic, well, mold, structural, among others.

  • Any issues might trigger repair requests; nonrefundable inspection costs.

Issues with Contingencies

  • Buyer must provide written notice of objection within specified timeline.

  • Failure to respond may result in losing earnest money and defaulting on the contract.

FHA & Fair Housing Compliance

  • Ensure compliance with fair housing laws; do not discriminate in any form.

Final Walkthrough

  • Essential to check if repairs are completed and property is in agreed condition before finalization.

Risk of Loss

  • Buyer may back out of contract if property suffers material damage before closing, as per contract terms.