If you are planning to invest in income producing properties, the question of purchased agreements usually crops up in your mind. You need not hire services of a lawyer to draw up this agreement every time you purchase a property. However, it is a good idea to have your agreement reviewed by an experienced lawyer to safeguard your interests. After your first purchase, you have a ready-made template in which you can make minor changes here and there in subsequent purchases depending upon the property and the seller.
If you have seen a purchase agreement and felt it was overwhelming because of use of complex legal terms, you should not worry at all. It is not necessary for your purchase agreement to be too lengthy and complicated. All that a contract needs is clear terms to which both the parties should agree. Another important thing is the description of the property and its price. You can make this agreement as simple as you want or as complex as you can.
Important elements of a purchase agreement
You should keep your purchase agreement short and simple if you want to increase chances of your offer being accepted by the seller. If it is easy to understand and the clauses are not confusing, the seller finds it easy to say yes to your contract. However, your purchase agreement needs to include following information irrespective of its size and content.
- Names of both parties
- Date on which it is signed
- Details of the property
- Price of the property
- Deposit you are making to the owner
- Requirement of a clear title
- How the property will be transferred in your name
- Contingency of finance
- Contingency of inspection
- Clause that gives you the option of walking out
- A time frame for the transaction
You can have more clauses depending on the specific property and the owner. This is necessary as every property is unique and so is the owner. You can also mention who will bear the closing costs and other expenses to make sure there are no disputes later.
How to develop the purchase contract?
You can read as many contracts as you want but you will not find a ready-made template that is a perfect fit for all your purchases. There are different regulations in different parts of the country and your contract should keep in mind all these variations. You can take help of Google for drawing up a purchase contract for a particular housing market of the country. In fact, you can take relevant points from several purchase contracts to draw up your own agreement.
Another method of preparing a purchase agreement is to go to any realtor’s club in your area and ask experienced realtor for their help. They will be happy to share their expertise on purchase agreements with you. They can also direct you to a reliable and authentic source of such purchase agreements. As a real estate investor, you will be buying not only vacant properties but also those with tenants. As such, it is prudent to have basic knowledge of all types of purchase agreements to safeguard your interests during a real estate transaction.
The advice given in this blog is only for informational purposes and it does not intend to be a legal advice. You are the best judge of your position when conducting a real estate transaction. If you think it is better to have the opinion of a real estate attorney, do not hesitate even if it costs you certain amount of money. Paying money up front is better than going ahead with amateur purchase agreement and risking lots of capital you are pumping in your real estate project.
If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.
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As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
