CONTRACT TIPS

1. In paragraph 1, in the space after the words "…including but not limited to the following…:" write in any items of personal property that are to convey with the real estate, in addition to any other item which may not definitely be considered a fixture (e.g. ceiling fans, chandeliers). DO NOT make reference to the listing here (or anywhere else in the contract). That is, do not write something like "...all items listed in listing number 0012345". Instead, write out the items individually without mentioning the listing.
2. Paragraph 2: Either real estate firm (or the seller, but it is not advisable) can hold the earnest money deposit. Make sure to indicate who is to hold the deposit and what form the deposit is in (e.g personal check, money order). If the deposit is to be less than the downpayment amount, enter that the deposit will be applied to the downpayment. Otherwise, have it apply to closing costs or prepaids.

    

   Important: Even if you expect the buyer to have no charges at closing (e.g. no downpayment, all costs paid by seller), make sure your buyer understands that he still may not have his entire deposit refunded at closing, due to tax prorations and owners title insurance.

    

   In the blank before the words, "additional funds…" enter the balance of the downpayment. In the next blank, enter the loan amount and then the type of loan (example: $85000 by FHA loan).

    

   If there is to be any owner financing, the last lines in paragraph 2 should indicate this. Write in: "See private party financing addendum". Then fill out the Private Party Financing Addendum to spell out the terms of the owner financing.

    

   If there is to be an assumption, write in: "See firm equity assumption addendum" and fill out that addendum to spell out the terms of the assumption.

 

3. At the bottom of page 1, clearly indicate the date that the contract was ratified. This is the date that the buyer and seller finish signing/initialing the original offer or any counteroffer; it is NOT the date that contingencies are later removed. The agent for the party who puts the LAST signature or initial on the offer or counteroffer should write in the date that occurred here and initial. The other agent should initial here when he/she receives the finalized contract.

    

   It is vitally important that everyone know what the date of ratification is, and that everyone agree on what that date is, since all deadlines in the contract are based on this date.

 

4. Paragraph 10: check the type of financing. If FHA, also write in the sales price in the blank within the paragraph.
5. Paragraph 11: If the buyer wants the seller to fix any obviously defective items, enter that information here. Important: if the defect is obvious, you must enter it here in the original contract, BEFORE doing the home inspection. The buyer may still do a home inspection, but that is to uncover defects that are not clearly noticeable.
6. Paragraph 12.D: If the buyer needs to sell their home in order to qualify for their loan, write that here. Also write in any other contingencies.
7. Paragraph 13: By signing the contract, the seller is agreeing to do any and all repairs in this paragraph up to an agreed-upon percentage of the sales price. This includes "walk-through" items in part D (heating, cooling, plumbing, electrical, appliances/equipment). In other words, even if the buyer does not have a home inspection, the seller is agreeing that these items will be operational before the walk through, and the buyer should make sure that they are working at the walk through.

    

   Important: If the buyer does a home inspection, any walk through items that are identified in the home inspection and which the seller agrees to repair on the Home Inspection Contingency Removal Addendum DO NOT count toward the 1% limit.

 

8. Paragraph 14D: Don't forget to indicate here if the seller has a real estate license or if any agent is related to the buyer or seller in any of the ways described. Check the listing disclosures to see if the seller is an agent or related to the seller and indicate it here when you write the offer so that the seller will not have to send back a counteroffer with that information filled in.

Additional Tips:

1. Always remember when you write an offer that you should have a copy of the property disclosure, and the lead paint disclosure and/or AICUZ forms if required, when you write the offer. These forms must already be executed by the seller before your buyer signs them. If you submit an offer without these forms, the seller will have to send the offer or counteroffer back with those forms and that will take extra time.
2. It is always best to have a pre-qualification letter when you write an offer and to submit it with the offer. If you do not do this, the seller will probably reject it or counteroffer with a pre-qual contingency or First Right of Refusal.
3. Always have your buyer or seller sign a Consumer Disclosure Information Form and attach it to the ratified contract.
4. You should do your best to make sure that all required disclosures and addenda (lead paint, property disclosure, AICUZ etc) are signed no later than the time the contract is executed. However, if for some reason one or more of these addenda have not been signed, the contract may still be considered ratified if all the parts of the contract itself have been completely signed. Therefore, do not wait to hand in a copy of the ratified contract to the office merely because you have not yet obtained signatures on every disclosure.
5. Checklist for a typical residential resale contract:
   
   1. Standard Purchase Agreement pages 1-7
   2. Property Inspection Contingency Addendum (unless buyer waives home inspection in paragraph 12.c).
   3. Property Disclosure (must be signed by seller first!).
   4. Lead Paint Disclosure if property built before 1978 (must be signed by seller first!).
   5. AICUZ disclosure (if property is in Norfolk, Va. Beach, Chesapeake, or Hampton)
   6. Property Owners Association Resale Addendum if property is in a POA.
   7. Condo/Coop Resale Addendum if property is a condo or coop.
      viii. Consumer Disclosure Information Form.
   8. Brokerage Fee Agreement if two firms are brokering the sale.
   9. Disclosure of Brokerage Relationship form if you are working with a buyer or seller who is NOT your client and who is NOT represented by another agent.
   These are the forms that will be included in the initial offer. As the deal progresses, other forms (such as Home Inspection Contingency Removal Addendum) will become a part of the contract.

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