As a real estate lawyer for home owners and buyers on Long Island, New York, we understand how a purchase contract works. But our goal is to help you know how it works. We offer expert legal advice to help with the buying or selling of a home. And help reviewing and editing purchasing contracts to make sure it aligns with your goals. Buying or selling a home is difficult, but we have years of experience in real estate law and can professionally handle numerous aspects in the realm of real estate. This includes sale of a business, sales or purchases of residential and commercial properties, and mortgage closings and contracts.
To start, a purchase contract is a document that provides the framework and guidance for any potential roadblocks during the buying or selling of a home. So, this contract needs to make clear of all the scenarios and how to handle them should them come to fruition. One important scenario is making sure you can get out of the contract should a situation present itself.
Here are some ways to address potential complications when it comes to buying or selling a home.
When someone is buying a home, they are almost always trying to sell a home, too. And oftentimes, the buying of the new home is contingent on selling the old home. So, including a contingency to ensure that the previous home is sold before the new deal is finalized is common procedure for language in a purchasing contract.
While drawing up a purchase contract, it should effectively spell out the amount of earnest money, which is essentially the deposit of the purchase of the new home. You will also want to make clear where it will be held during the closing process. In general, buyers put up anything between 1% and 5% on the purchase price, which typically goes toward the down payment or closing costs of the home. Or, if the buyer does not follow the stipulations in the purchase, then the money can go go the seller if the deal falls through. This is why the language needs to be precise. Otherwise you can lose money you might otherwise be able to keep.
Timing is everything in life. And timing effects both the buyer and seller dramatically when it comes to purchasing a new home. Sellers do not want the closing process to drag on too long. While the new buyers want to make sure they have enough time to properly complete this big purchase.
For the buyer, they want to make sure they can schedule and review the home inspection and understand any underlying issues and compare it to the appraisal. However, buyers who miss deadlines are at risk of losing the contract and potentially losing their earnest money.
So, what this all means is that the timing of the buyer's possession of the home needs to be clearly stated. Most people who buy a new home can move in right after the closing. However, some sellers may ask for some extra time after closing because they need to find or finalize another place to live. Or their new home is not ready yet. All of these details should be included in the purchase contract to make sure all parties are happy with the deal.
When it comes to the closing of the home purchase, both the buyers and sellers have to pay closing expenses. In the purchase contract is where you can find out who pays which closing costs. A common example is for the buyers' closing costs to total about 2% to 5% of the purchase price for the home. While sellers commonly pick up the real estate commissions and various taxes. The closing of any home purchase goes smoother when these details are in a purchase contract.
Home Appraisal Too Low
If the appraisal for the home is too low, then then buyer's lender may likely rescind the mortgage loan offer due to a concern that it is giving the buyer more money than the home is worth. When a low appraisal comes in, it could be a way to re-open purchase price negotiations.
Home Buyer's Mortgage Falls Through
If the buyer of a home loses a job or has some sort of financial setback before the closing date, then that may nullify a purchase contract. Home buyers need to be making the salary they indicate on the loan application, otherwise lenders will drop out. These checks occur leading up to the day of closing to make sure the buyer can afford the loan.
Home Inspection Indicates Issues
When it comes to the home inspection, it can lead to issues with the purchase contract. Not having enough specifics regarding the outcome of the home inspection can lead to grey areas where someone, most likely the potential buyers, to pull out from the deal. Also, home inspections can be a chance for renegotiation on the price of the home. Or at least a way to figure out how much the seller may need to pay for repairs.
As trusted lawyers on Long Island regarding real estate law, we can help you with many aspects regarding the buying and selling of a home. This includes help with a purchase contract, as well as mortgage closings and contracts. So please, do not hesitate to reach out to us today for more information about our many legal services. The number for our office is 516-564-4200. When you call, we can provide you with a free, no-obligation consultation to go over any and all of the legal issues you may be going through.