Knowledge is power with purchase contracts
Q: Now that we found our dream home, how can we protect ourselves regarding the purchase contract our agent wants us to sign? — Meg
A: The purchase and closing of your new home is one of the most complex and stressful times most people will endure. Buying a house is not something that people do every day and anything unknown can be frightening. The key to getting through the process smoothly is knowledge.
It is always a good idea to hire an attorney to help you through the process and to have someone in your corner, but the simple reality is that the large majority of people do not do this. If you decide to go it on your own, there are still some things you can do to make the process easier.
The first time most buyers see the purchase contract is after they find a home and their real estate agent wants to send it to the seller right away. With this time crunch, it will be almost impossible to read the long and technical contract, let alone understand it. This is easily avoided because almost all transactions use a fill-in the blanks form contract. Ask your agent for a blank copy and read it before you even start looking at homes. Ask your agent, or research on the internet, any parts of the contract that you don’t understand.
Remember that even if there is a “normal” way of doing things, everything in the contract is negotiable. You may be able to get a better price by, for example, agreeing to pay a closing cost that the seller would traditionally pay. You also need to understand the various contingencies and time periods in the contract. Just because your agent feels your offer will be “stronger” to the seller if you enter into an “as-is” contract, it may not be a good idea if you don’t have the extra cash to make the repairs.
You also want to make sure all of the deadlines, such as for getting a loan approval, performing inspections, and getting association approval, are long enough to actually accomplish those things.
Once everything is to your liking and understood, you can sign the contract — not before. After the contract is signed, you should write down all of the various deadlines in your calendar. These are very important and you can lose your deposit if a deadline is missed, even by a day.
Remember that what you agree to has consequences and the fact that you did not read or understand what you signed will not get you off the hook.