Over the years the state of Colorado has developed a very buyer protective type of real estate sales contract. In a conversation with another broker a few weeks ago the topic of failed purchase contracts came up. He was astonished at the number of contracts that he had written that have fallen through and not gone to closing in 2007. After discussing some of the reasons for these failures I made a kind of mental inventory of a few of the major things that we as real estate professionals have to pay very close attention to when it comes to drafting and creating a successful sales contract. I thought it may be of benefit to many of my selling readers to list a few of the major terms to be aware of when participating in a real estate sale.
- The closing date. Make sure that the date the buyer wants to take title is reasonable for you. I have witnessed major emotional heartburn over closings that did not fit well with the seller’s schedule.
- The earnest money. Look for the largest earnest money deposit possible. Since this money is forfeited if the buyer backs out, a large earnest money deposit is a good indicator of the level of seriousness and ability of a buyer.
- Fixtures and personal property. Be sure to check the items that the buyers expect to remain with the property and make sure it is acceptable.
- Inspection repairs. Determine what the requested repairs will cost and determine if it would be better to take care of these items or offer to lower the price by the determined amount. During an already stressful process, often times it is easier to just adjust the final price.
- Contingencies. See what additional factors the buyer wants met before the contract is final- inspections, selling an existing home, obtaining a mortgage, review of contract by attorney. This list could be limitless. Set parameters on contingencies so that they will not drag out and keep the sale from becoming final. My rule of thumb is the more contingencies the weaker the desire to purchase.
- The contract expiration date. See how long you have to make a decision on an offer.
Obviously the most important part of any purchase contract is the sale price. We know this without giving it too much thought. It’s the seemingly small things that can often times hang a contract up from going to closing. As a seller you want to find and accept the “cleanest” contract possible. A Realtor with daily experience can be an incredible asset to help you decipher the sometimes not so obvious issues lurking behind the typed print of an offer. Sometimes the reasons behind the arrangement of specific terms that a buyer asks for can be re-arranged in such a way that helps you, the seller, obtain ultimate success. It pays to have a Realtor on your side that can be your advocate in walking through this process.