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Every real estate transaction is different, but most follow the same general structure and timeline. All of the terms and conditions are negotiated on the Purchase and Sale Contract. Whether you are the Buyer or Seller, the Sciarra/Mok Team will work hard to negotiate the best terms and conditions for you. The following is a list of items that are determined by the contract:
1. Purchase price
2. First Deposit
3. Second Deposit
4. Total Mortgage Amount
5. Cash at Closing
6. Inspection Contingency
7. Mortgage Contingency Date
8. Type of Mortgage
9. Is the Buyer’s ability to close contingent on the sale of Buyer’s Property?
10. Closing Date
This is obviously the most important piece of information used to negotiate the purchase and sale of a house. It is not the only important factor, however. In a multiple-offer situation, it is not unusual for a Seller to accept a slightly lower price in exchange for other more favorable terms.
This is also known as earnest money. An offer from a Buyer will include a copy of this first deposit check. The check is always made payable to the listing broker for the property. As soon as the contract has been signed by all parties, the check will be deposited with the Listing Agent. The amount of this check generally ranges from $1,000 to $5,000, but can be higher in a multiple offer situation when a Buyer wants to show strength.
The second deposit is typically due within 10-14 days of the signed contract. The second deposit must always be in the form of a bank check made out to the listing broker for the property. The amount of the second deposit varies based on what is customary for the area. In most cases, the total of the first and second deposits should be 3-5% of the purchase price. The amount of money you are required to bring to the closing will be reduced accordingly.
The mortgage is the amount of money that the Buyer will borrow in order to purchase the property. A conventional loan is 80% of the total purchase price. Other loan types (FHA, CHFA, VA) can offer mortgage amounts as high as 97% of the total purchase price.
The money that the Buyer will bring to the closing is equal to the purchase price, less the mortgage amount, less the first and second deposits, plus closing costs. Your Lender should be able to estimate how much you will need including closing costs. You will not get the exact amount until right before the closing.
The Buyer typically has 10-14 days in which to conduct all inspections on the subject property. The contract will indicate the exact inspection contingency date as well as the inspections that will be done. If any issues arise during the inspection period, the Buyer must submit their requests to the Seller in writing by the inspection contingency date. The Buyer and Seller will then negotiate how they will handle the issues. If the Buyer decides to terminate the contract based on inspection findings, they must do so by the inspection contingency date in order to recover their full deposit.
This is one of the two big contingencies in the purchase/sale of a home. At the time of the offer, the Buyer will indicate the date by which they will supply the Seller with a formal mortgage commitment from the Lender. Thirty days from the contract signing date is fairly standard. If the Buyer cannot obtain a formal mortgage commitment by this date, they will either request an extension of the commitment date, or risk losing their deposit money if they are ultimately unable to obtain a mortgage. If the Buyer is not able to obtain financing, he/she must submit an official letter of denial from the Lender along with contract termination paperwork. The contract termination must occur prior to the mortgage contingency date in order for the Buyer to receive a refund of their deposit.
The Buyer must indicate the type of mortgage for which they will be applying at the time of their offer. This is important information for the Seller to have when evaluating an offer.
The Buyer must indicate whether they have sufficient funds to close without the necessity of selling any other real estate. Again, this is very important information for the Seller to have when evaluating an offer.
The Buyer will indicate the date on which they wish to close on the home. This is always subject to negotiation and can change between the offer and the final contract.
While the standard offer contract is a complete document, sometimes circumstances arise when the Buyer will want to include additional contract riders such as: Well/Septic, As-Is, Appraisal, Condo. We will be careful to explain the use of relevant riders as the need arises in specific situations.