The Purchase Offer - Three Important Clauses

Many home buyers, and even some investors, seem to approach a real estate purchase offer as just an opening of negotiations. It can be this, of course, but it is also a legally binding contract the moment the seller signs it. You don't get to change the terms after that, or back out of the deal. That is, unless you have the right language in the offer to begin with.

Purchase Offer Clauses To Protect You

1. Inspections

This is perhaps one of the more important clauses in a purchase offer, and is common. But make sure you get the wording right. Ask for help if necessary, but the point is to make it possible to cancel the offer if any inspections show problems you don't want to deal with. Such a clause might read something like this; "This offer is contingent on the buyer's approval of the results of a termite inspection and general home inspection; said inspections to be done at buyer's expense within one week."

A seller or agent may want to limit your option to back out of the deal to findings of "structural damage," or something similar, but stick to the more general "approval of the results" kind of language. You don't want to be bound by the contract if an inspector finds some non-structural problem, like electrical problems or drainage issues in the yard. This clause lets you have inspections done. If anything too negative is found, you can refuse to "approve" of the results. This means you can get your deposit back, or you can renegotiate a lower price based on what you find.

2. Assignment

This is a clause for real estate investors. You may need to bring in a partner, for example, even if you didn't initially plan on it. A partner may want to be part of the contract, of course, and he can be if you have the right to assign the contract as a clause in your purchase offer. This usually means putting "and/or assigns" after your name on the offer, but ask the real estate agent or a lawyer what language is used locally.

With such a clause in the offer you can sell your "position" to another investor as well. This means that if you have trouble with financing or otherwise can't close the deal yourself, you can assign the contract to some other investor, who will hopefully pay you a nice fee (if you bought a good deal). Sellers will often accept this clause if you explain that it means you can bring in a partner or otherwise be sure that the sale will go through. In other words, sell it as something that assures the seller this sale will close.

3. Financing

What's one of the most common reasons that a real estate purchase doesn't close? Trouble with financing. You may have been prequalified, or even preapproved for a mortgage loan, but this doesn't mean the bank has agreed to a particular loan. Since you spoke to a lender, interest rates may have gone up, rules may have changed, or something negative may have been found on your credit report.

What happens then? Well, if you can't close the deal, you lose the deposit you handed over with the purchase offer. That is, unless you made the offer contingent on getting a loan. The usual language is something like this; "This offer is contingent on the buyer obtaining a firm commitment for suitable financing within ten days." If such general language isn't acceptable to the seller, specify what "suitable" means in terms of interest rate and loan fees or points, but make it something you can live with.

There are many other routine clauses that need to be in your offer. They specify things like when the sale will close and who pays for what. Ask the real estate agent or an attorney about those. But don't forget to also include one or more of the above three clauses as necessary, whether the seller or agent like them or not. A seller has the right to say no to your offer in any case. But you have the right to put any protective clauses you want in a purchase offer.

The Purchase Offer - Three Important Clauses

Many home buyers, and even some investors, seem to approach a real estate purchase offer as just an opening of negotiations. It can be this, of course, but it is also a legally binding contract the moment the seller signs it. You don't get to change the terms after that, or back out of the deal. That is, unless you have the right language in the offer to begin with.

Purchase Offer Clauses To Protect You

1. Inspections

This is perhaps one of the more important clauses in a purchase offer, and is common. But make sure you get the wording right. Ask for help if necessary, but the point is to make it possible to cancel the offer if any inspections show problems you don't want to deal with. Such a clause might read something like this; "This offer is contingent on the buyer's approval of the results of a termite inspection and general home inspection; said inspections to be done at buyer's expense within one week."

A seller or agent may want to limit your option to back out of the deal to findings of "structural damage," or something similar, but stick to the more general "approval of the results" kind of language. You don't want to be bound by the contract if an inspector finds some non-structural problem, like electrical problems or drainage issues in the yard. This clause lets you have inspections done. If anything too negative is found, you can refuse to "approve" of the results. This means you can get your deposit back, or you can renegotiate a lower price based on what you find.

2. Assignment

This is a clause for real estate investors. You may need to bring in a partner, for example, even if you didn't initially plan on it. A partner may want to be part of the contract, of course, and he can be if you have the right to assign the contract as a clause in your purchase offer. This usually means putting "and/or assigns" after your name on the offer, but ask the real estate agent or a lawyer what language is used locally.

With such a clause in the offer you can sell your "position" to another investor as well. This means that if you have trouble with financing or otherwise can't close the deal yourself, you can assign the contract to some other investor, who will hopefully pay you a nice fee (if you bought a good deal). Sellers will often accept this clause if you explain that it means you can bring in a partner or otherwise be sure that the sale will go through. In other words, sell it as something that assures the seller this sale will close.

3. Financing

What's one of the most common reasons that a real estate purchase doesn't close? Trouble with financing. You may have been prequalified, or even preapproved for a mortgage loan, but this doesn't mean the bank has agreed to a particular loan. Since you spoke to a lender, interest rates may have gone up, rules may have changed, or something negative may have been found on your credit report.

What happens then? Well, if you can't close the deal, you lose the deposit you handed over with the purchase offer. That is, unless you made the offer contingent on getting a loan. The usual language is something like this; "This offer is contingent on the buyer obtaining a firm commitment for suitable financing within ten days." If such general language isn't acceptable to the seller, specify what "suitable" means in terms of interest rate and loan fees or points, but make it something you can live with.

There are many other routine clauses that need to be in your offer. They specify things like when the sale will close and who pays for what. Ask the real estate agent or an attorney about those. But don't forget to also include one or more of the above three clauses as necessary, whether the seller or agent like them or not. A seller has the right to say no to your offer in any case. But you have the right to put any protective clauses you want in a purchase offer.

The Real Estate Purchase Agreement

A real estate purchase agreement is not a rough guide to a deal. It is a contract specifying exactly what legal obligations each side has. In other words, be sure it says what you want it to say, and has everything you need in it.

Normally, if you are buying a property that is listed with a real estate broker, they will have a purchase agreement ready to have the blanks filled in. If you have a buyer's agent that you work with, he or she will have the necessary forms. There are the routine parts which are necessary, but not easily forgotten or done wrong. These include the following.

The Date - Names of Buyer(s) and Seller(s) - Address Of Property - Legal Description Of Property - Purchase Price And Terms - List Of Anything Included With Property - Date The Deal Should Close By - Closing Process - Disclosure Statement - Signature With Date For Buyer And Seller - Addresses and Phone Numbers Of Buyer And Seller.

These may be routine items, but be sure that you look all of this over carefully. If the disclosure statement clearly states that there is a foundation problem, for example, you can't later get out of the deal when those cracks in the basement make you nervous. With the following items, be especially careful.

Real Estate Purchase Agreement - The Crucial Items

Good Faith Deposit or Earnest Money - Real estate agents will try to convince you that your deposit should be as much as possible. There is no "normal" amount, and while it's true that a seller might take an offer more seriously with a bigger deposit, this is up to you. Real estate is regularly bought with $500 deposits. An alternative is to include a deposit of $200, and the line, "to be increased to $2,000 when all contingencies are satisfied." That way if the inspection shows nasty surprises your money isn't tied up while the seller argues that there isn't a problem.

Designation Of Who Pays What - Make sure the agreement clearly states who will pay for what. Are you splitting the cost of the fee paid to the closing company? Who is paying each of the other closing costs. If it doesn't state in the purchase agreement that the seller is paying, expect that you are.

Financing Contingency - Unless you are paying cash, you will probably have to get a loan. A Pre-approval from the bank doesn't guarantee much, so be sure that you make the agreement contingent on getting that loan, and specify the terms. For example, it might read, "This offer is contingent on buyer obtaining a mortgage loan within seven days, at 7.5% annual interest or less."

Inspection Contingency - You may not need an inspection if you are buying land, but with residential real estate an inspection is a good idea. Generally, the clause for this will allow you about a week or ten days to get it done. It might read something like this: "This offer is contingent on an inspection of the property at buyer's expense, and buyer's approval of the results of that inspection within seven days."

Other Terms, Conditions or Contingencies - There are sometimes other issues, and you have to address them in the real estate purchase agreement. For example, if the back yard is full of junk cars, you better add a clause like, "All cars and junk to be removed at seller's expense before closing." If you are shopping alone but your wife needs to approve the home, you could also add a clause like, "Offer is subject to a approval by spouse within two days." Then your wife can look at the house later and say yes or no to the deal. As you can imagine, sellers may not like that one.

If you are not working with an agent, you can buy an agreement (sometimes called an "offer to purchase" or "buy-sell agreement") online or in some office supply stores. Having a lawyer review all the paperwork is best. Remember that a real estate purchase agreement is a binding contract the moment you and the other party sign it.

Before Arranging To Buy Overseas Property, Think About These Questions

If someone is going to buy overseas property, they have a great number of options available to them nowadays than they have had previously. At times, funders in the UK may be astounded at the reasonable cost of sale property, and they can very well pick whatever place in the world that they desire. If you are not an experienced investor in this field, however, you should do quite a bit of research before investing.

Buying overseas propert is not meant to be a shocking experience, but so that you aren’t caught off guard by a situation n the future, you should look into all of the pertinent facts. If you become attracted to this property, prior to deciding, question yourself about the following informationWhen you have found investment real estate which is appealing to you, it would be wise to use the questions coming up next to direct you before selecting.

Buy Overseas Property UK : What Will You Do With the Property?

Will you be relocating abroad? Do you intend to lease the property for revenue purposes? Is it destined to be a fun resort for your relatives? Do you need a pleasurable location to live in when you retire? Could you be hoping to locate a convenient funding venture which can turn a quick profit? The worth of a distinctive property to you could rely on the way you respond to the next questions.

Overseas Property UK : Is It A Good Deal -- What About A Decent Purchase?

To determine how good a price you are getting, you have to look at similar properties in the area. You want to keep in mind the up-to-date economic inclination and see if the prices are keeping consistent or are inclining and declining. Today’s asking prices don’t speak for the market trend if the prices are dropping. This is to say that you could find a more lucrative deal on this property or something like it.

Does This Property Fit Your Objectives?

At times, a foreign investor will become attracted to an area because of certain aspects such as nature and the environment and still are not completely satisfied that their purpose will be served in the end. For example, if you plan to live there year round, make sure it's a place you will be comfortable in during all seasons. A large amount of localities offer a different climate in the coldest season than in the hottest season.

If you plan to let the property, be sure that it has all the features that people will want. Is it aesthetically pleasing~. Are repairs necessary or is it al in sound condition? Is it located near an airport, ,the beach, a shopping mall, or nighttime recreation {clubs, etc}? Based on locality, these and various other matters might be significant.

Overseas Property : Is Everything Apparent About Economic And Legal Concerns?

A lot of monetary aspects could come into play if you are buying an overseas property. If your purchase is being conducted by an agent, be certain that you know what their commission is. In some countries, this is considerably higher than what you may be accustomed to.

Are you knowledgeable of how much tax you could be responsible for? There may be special taxes for foreign buyers in some cases. Is there a limited number of uses for the property? In case you aren’t totally positive regarding any of this, you should get the advice of an attorney who deals with the country from which you are purchasing real estate.

Anytime you buy overseas property, it is best to feel confident that you will have quality and that from your investment you will receive much benefit and enjoyment.

Buying A Home With No Money Down

Buying a home with no money down has become easier than ever. Unfortunately, it has also become more necessary than ever, thanks to ever-falling savings rates. With that in mind I would like to respectfully suggest that if you need to buy your home with no money down, you may have a more general problem with your finances that needs to be worked on. In any case, there are times when it makes sense to have a lower or non-existent down payment, so let's look at four ways to accomplish this.

1. Have the seller finance part of the deal. For example, if you can get a mortgage loan for 90% of the purchase price, and the seller lets you make payments on a second mortgage note for the other 10%, you have a no money down deal - especially if the seller pays closing costs. Some sellers will be willing to do this if you pay full price or close to it. The lenders on the first mortgage may not agree to this, though, so ask them.

2. Get the seller to finance it all. Sellers need at least some cash, so how can they provide all the financing and still get cash? By creating two notes and selling one. Let's look at an example.

Suppose the seller is asking $220,000 for his home. He expects to get about $210,000 for it, and he needs at least $150,000 in cash to pay off his $130,000 mortgage and have a little left over. You offer him $240,000 for the home, in the form of two mortgage notes. The first is for $200,000 and the second for $40,000. As part of the deal, you have arranged for a "note buyer" to buy the first from him for $170,000.

Now he has $170,000 at closing, plus you are making payments to him on the other $40,000, meaning he got the $210,000 he expected out of the sale. Of course, you had to overpay for the home due to the steep discounting ($30,000) on the sale of the first note, and you will have payments on both. In other words, there are only certain times when this technique will make sense. (Certainly it would if you could rent a property for more than the two payments and other expenses added up to.)

3.  Borrow the down payment on your credit cards. This is either a great way to get into more financial trouble or, if you handle it right, a good way to stop renting. If you can get a $95,000 loan on a $100,000 condo, for example, you only need $5,000 for the down payment. Why not get a cash advance on a credit card when there is a low-interest deal?

Since you can't "borrow" for a down payment according to many lender's rules, get the advance a few months earlier for a "vacation." Take a taxi downtown for your vacation and leave the rest of the money in your checking account until it is time to buy a home. A lender can't read your mind to know what your intent was, so this is legal, but is it unethical? First, I would like to remind you that lenders encourage you to take out unsecured loans for vacations and depreciating assets like cars and boats, while saying you shouldn't borrow for a down payment on a home that will likely go up in value. That may be unethical. Playing by the rules and repaying everything you owe is not unethical.

Just be sure that you have a plan to quickly repay the credit card balance. For example, if you commit to using $2,000 of your tax refund to repay the balance, and otherwise paying $150 on it each month, you should have it paid in less than 2 years. If you can't do that, you are probably just creating more problems for yourself using this strategy.

4. Get a 100% first mortgage loan. There are still some lenders doing these (it is mid-2007 as I write this), and if the seller will pay closing costs, you won't need much cash at all. The catch? You will probably pay higher interest rates for these loans.

Sellers will almost always want some cash when they sell. Notice they get it in every example above. You might have also noticed that it doesn't have to be your money. So think about "no money down" as "How do I give the seller what he wants without using my cash." That is how you buy a home with no money down.

Today's Economic Condition and Buy to Let Deals

The appeal of UK Buy to Let Deals is apparent. You have the potential of purchasing a property and making a good living from the revenue. The idea is quite clear, on the other hand, it could be difficult discovering a sound opportunity, bearing in mind the current state of the UK financial system (and basically most of the planet).

UK Buy to Let : During Poor Financial System

Until quite recently, many financial institutions encouraged investors, even ones with no experience, to get in on buy to let opportunities. Special, very attractive mortgages were offered. Because of the latest economic happenings the buy to let business, and others, may have to go through reconfiguration and impending uncertainty.

Some people are giving up on buy to let; however, since this type of business is based on living abodes, a basic need of every person, this concept is a little far out. People will continue to need flats and other kinds of housing to let.

Investing In Buy to Let Thesedays

The fact is, whatever comes out of the present restructuring of the banking industry is inevitably going to lead to opportunities for resourceful investorsInevitably there will be great prospects for wise lenders due to the current revamping of the banking business. You could have to use a bit more determination and imagination nowadays if your desire s to back a buy to let opportunity.

In the past, the buy to let concept had become an accepted “by the numbers” kind of procedure; however, in today’s economy one needs to handle every possible deal with added preparation and attention. An elevated interest rate is an irrefutable obstacle. In contrast, unforeseen favorable circumstances in the form of decreased prices can come about through an unorderly economy.

Essential Questions About The Location

There are particular factors in the economy which you have to be able to recognize prior to making an investment in buy to let real estate. The first factor to consider is the location. It needs to be convenient in terms of proximity to shopping areas, major roads, public transportation, schools and places of employment. What is the overall condition and appearance of the neighborhood? You should consider factors like the local economy, crime statistics, and the quality of local schools as well.

The Condition of the Property

All points surrounding the shape of the dwelling itself must be thought out. Is the property in need of restoration soon? Repairs or improvements can always be used as negotiating points. The seller needs to agree to take care of this amount or decrease the sale price to adjust.

Dwellers

Tenants, of course, will be your source of income when you buy to let. If there are already tenants leasing or renting the property, is there available housing left. Can the property appeal to renters or leasers who are in the black.

Buy to Let Opportunities Today: Having the Right Mindset

To find a good buy to let investment today, you must have the right mindset. Anytime dreadful news occurs pertaining to the economic status, plenty of us will go into withdraw mode or repeatedly become passive. Potentially good deals are awaiting those who choose to keep looking for them. ”Keep your eye on the prize” and at any given time you will locate the buy to let offer in the UK that is right for you.

Buying Off Plan: Some Information Before You Invest

When you are contemplating on purchasing investment property, you need to keeping mind buying off plan. Buying off plan implies that you will buy property which is not currently in a fully developed state. Sometimes people are uncertain about something that they take can’t take a look at, but absolute profit is available for such investments as these.This report will speak of the opportunity alongside some of the things that you should be aware of ahead of your investment.

Buying Off Plan : Off Plan Properties Can Bring A Major Price Cut

At the time you buy off plan you are almost always getting it for less money than you will a finished property. The reason that selling off plan is important to developers is that it is easier for them to fund the building of an already sold property. This needs to be given to the purchaser. As you are studying about any kind of off plan investment, search the market for the same type of real estate and count on purchasing it for much less -- even 25% less, under some conditions.

Hold Onto Your Money Longer

Regarding off plan real estate, you will need to have a down payment though you won’t make a mortgage payment until after the final construction. This way there is more yielding concerning funding.

Buying Off Plan : Development Opportunities

As you know, you can purchase an off plan property for less than a full developed one. This means that if you want to resell the property, you can often make a quick profit. Naturally, the real estate market in that area will dictate how quickly your property will sell. Think about t his in your plans.

Study Your Development

Be sure that you examine each point dealing with the development and the area when considering an of plan investment. You need to be certain that the seller you are trading with is honest. If you are not familiar with architectural plans, be sure to have the plan analyzed by someone who can explain what everything means. Normally this will be done by the developer, although not in it’s entirety, but it would also be best to have someone who isn’t influenced either way to talk it over with you. You should be clear about the kinds of materials that will be used in construction, the presence, type of or absence of any features or amenities (e.g. heating, air conditioning, recreational facilities, access for the handicapped, landscaping, parking, etc.). This can also be vital to the overall worth of the development. Also be clear about any zoning issues or legal permits that may be needed. The developer is responsible for securing these, but make sure this is all covered.

Off Plan UK : Surrounding Area

This pertains to any type of property investment – the surroundings are equally as key as the development is. Gather as much information as you can on the area, municipality, or region. Included is information pertaining to the area economical situation, the type of weather (slow or down seasons for some, and critical weather for others-- especially through certain seasons) and the crime statistics. Another element may be the distance of major highways, roads, and public rides. 

These are some issues to consider if you are thinking about buying off plan investments. If you plan carefully, you can find some very good off plan investments.

A Few Reasons That Make Buying A Vacation Home Better Than Renting

If you spend a lot of time away from home and can afford it, buying a vacation home has several advantages over a rental home and certainly over the lack of privacy in hotel rooms. More living space is a major advantage and not having to worry about tipping the hotel staff or finding places to dine out each night. Buying your own vacation home also means that you don’t need to live in the same old room for an entire week or for the duration of your stay in a holiday vacation rental. The good news is that you can find many appealing vacation homes in all parts of the world and these vacation homes are as easy to find as are hotel rooms.

With a vacation home you get to have a home base away from home and there are several other advantages to be had including getting bigger bang for your buck, more space and privacy as well as kitchen privileges – even down to being able to choose and use your own toaster! In addition, you will enjoy the convenience of having your own bathroom and being able to come and leave a vacation home whenever you please and there are no hassles to worry about such as finding hotel parking and having other security concerns, especially when going out late at night. Perhaps the biggest advantage to choosing a vacation home is that you can choose from different locations and different types of homes including country cabins, and villas situated close to a lake or even a condo that overlooks an ocean.

Do plenty of research before buying a vacation home as it is a long-term commitment and investment and you need to make sure the location, size and other aspects are suitable for your medium to long term needs. 

Low Ball Home Offers

The bad news is that your low ball home offers are not likely to be accepted. The good news is that they work anyhow. Let's look at why that is.

Most real estate sells for a bit less than the asking price, but a "low ball" offer on a home is one that's lower than the usual discount. For example, if most of the homes in your area sell for two or three percent less than the asking price, and you try to get a house for 15% less, that will be considered a low ball offer. It will generally be frowned on by the real estate agent, which is irrelevant. If you have a good reason to do so, just make your offer.

What's a good reason to make a low offer? It might be necessary. You may only be able to borrow a certain amount, and so you need a lower price for a given home. You might need to keep payments lower so you can get cash flow from a rental house. You might just want to buy low and sell for a profit. Whatever your personal or investment reasons, the idea is that you only get a deal if you ask. But will it work? Will the seller accept that low price? Very rarely, but that's okay as long as you understand the process.

If you need a home right now, don't go around offering 20% less than the asking prices. You probably don't have time to waste trying to find that one-in-a-hundred sellers who will say yes. On the other hand, If you are an investor and it takes two months and a hundred offers to get a deal you can make $20,000 profit on, why not do it? Refine your technique and you might get one-in-thirty to say yes. That may sound like bad odds, but what if you made thirty offers per month? You would be making 12 profitable deals per year, right?

How To Make Low Ball Offers

Perhaps the most important point to make about low ball offers is that you don't need to ever have one accepted to make money with them. That's because a seller will often make a counter-offer. He is asking, $210,000, for example, you offer $162,000, and he comes back with $175,000. If that suit your purpose you say yes.

One of the primary functions of a low offer is to lower expectations. I was once trying to sell my car and the first offer I had was for half of what I was asking. I was shocked, and said no. But it got me doubting my estimate of value, and I was ready to accept almost any offer higher than that first one. That's how the process works. Here are some other pointers.

Make a lot of offers. Some investors make offers without even looking at the houses to save time. They just write it up at 25% less than the asking price and include a good inspection clause so they can back out of the deal if the home has any serious issues. Of course most offers made this way are rejected, but the idea is to make the process efficient so that one-in-a-hundred can be found more quickly.

See uncertainty as an opportunity. Uncertainty does two things. It scares away buyers, or causes them to make really low offers. It simultaneously scares sellers into accepting less than they otherwise would. Both of these effects are good for an informed investor.

For example, I recently saw a fixer upper with a price of $50,000 get an offer for $5,000. The buyer probably guessed that it was worth more than that, but was uncertain about the repair costs. The seller said no, but was now probably even less certain about the asking price. An investor with the skills and knowledge to say with some confidence, "That will take $20,000 to fix up and will sell for $90,000, might have profitable buy at $30,000 (and the seller might jump on that offer after the first one).

With unique properties uncertainty is a given. This is why Donald Trump was able to buy a 25 million dollar home for 5 million, and why Richard Branson could buy a 3 million pound Caribbean island for just 180,000 pounds. With both islands and high-priced estates nobody can say for certain what the value is. The lesson is to go low when the property is not easily priced.

In fact, some uncertainty is almost a requirement. Why would a seller ever accept 20% less on a home if it is the similar to the other homes around it and they are all selling for close to asking price or appraised value? In other words, choose the right homes to make these offers on if you want to do better than one-in-a-thousand. The right homes include homes that are unique, have problems, have been on the market a while, have very motivated sellers, or have just been listed.

Let the sellers know why they should accept your low offers. List the problems you see, especially those that the sellers may not be aware of. But do this on paper; don't confront sellers with their home's flaws. You want to be nice. In fact, apart from the price, give them anything they want if it won't cost you much, like a fast closing, time to move, or a higher interest rate if seller financing is involved (and especially if you'll be selling soon anyhow).

To sum up, your goal is to get some of your low ball home offers accepted (maybe just one). So choose the right homes to begin with, see the first offer as a negotiating ploy, and be nice to the seller. Then keep trying until you have a deal.