Financing Tip - The Power of a Well-Crafted Purchase Contract
In the ever-evolving world of real estate, having a contract with a 30-day window is akin to having a safety net for unforeseen hiccups during the closing process. Despite our ability to close deals swiftly, this buffer eliminates the need for constant addendums, ensuring a seamless and efficient process that keeps your focus on the bigger picture.
TOOLS & TIPS
3/11/20241 min read
Let's delve into the top 3 Contingencies that will fortify your position and safeguard your earnest deposit:
1. Due Diligence Period:
- What it is: A dedicated timeframe for in-depth property assessments.
- Why it's important: It empowers you to uncover any issues with the property before committing fully.
- Benefit: Allows negotiation for repairs or an exit strategy if necessary.
Example: "Buyer shall have a Due Diligence Period of 15 days from the Effective Date to inspect and investigate the property. If, in Buyer's sole discretion, the property is found unsatisfactory, Buyer may terminate this agreement, and the Earnest Deposit shall be returned."
2. Financing Contingency:
- What it is: A safeguard in case financing falls through.
- Why it's important: It protects your earnest deposit from unexpected financing challenges.
- Benefit: Provides an escape route if securing financing proves challenging.
Example: "This agreement is contingent upon Buyer obtaining approval for financing within 30 days. If Buyer is unable to secure financing, Buyer may terminate this agreement, and the Earnest Deposit shall be returned."
3. Appraisal Contingency:
- What it is: Allows renegotiation or withdrawal if the property appraises below the agreed-upon value.
- Why it's important: It shields you from overpaying for a property.
- Benefit: Maintains your asset value and provides a strategic position for renegotiation.
Example: "The Property must appraise at a value equal to or exceeding the purchase price or, at the option of Buyer, this contract may be terminated, and the Earnest Deposit shall be returned."
You can adapt these examples to your specific needs or consult with a real estate attorney to ensure compliance with local regulations.
*Bridge loan rates and terms are based on a combination of factors: LTV, FICO, and Experience and are subject to change.
†Residential and Commercial loan rates and terms are based on a combination of factors: LTV, FICO, and Experience and are subject to change. Non-Owner-Occupied investment properties only. See our Owner Occupied page for current States that we are licensed in.
Cash-out LTV based solely off of appraised value and in some instances cost basis.
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