Writing a home purchase contract is crucial. Otherwise, it can easily derail a deal.
Here are some common contract mistakes:
1. Buyers don’t secure financing by deadline.
Many contracts are contingent upon the buyer securing financing by a particular date. However, in today’s tight lending environment, you’ll want to ensure you allow extra time for buyers to get mortgage approval. Otherwise, sellers may terminate the contract altogether and even keep the earnest money deposit if a buyer doesn't meet the deadline in getting financing.
Be realistic about your closing date and don’t try to close too quickly, Patti Lawton, a broker with Welcome Home Realty in Brunswick, Maine, told Bankrate.com. "There are a lot of things that need to be done properly, and you must give lenders, title companies, and others time," Lawton says.
2. Not being clear on what stays with the house.
Clearly state in the contract what stays with the home. You don't want buyers to walk into their new home after closing to unexpectedly find the chandeliers missing.
3. Missing signatures.
"Sometimes the home is owned by both spouses, other owners or an entity such as corporation," says lawyer Jeff Marks, a partner with Ryan and Marks Attorneys LLP in Jacksonville, Fla. "Make sure all of the parties sign the contract. If a party to the transaction fails to sign, they're not bound to perform the contract."
Source: “Write Home-Purchase Contract Clearly,” Bankrate.com (April 2011)