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What
paperwork will I encounter when I make an offer
to purchase?
What paperwork do I sign to
buy my home and what does it mean?
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Forms
Needed To Purchase Real Estate
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Real
Estate Purchase Agreement
The "Purchase Agreement" is what is
normally referred to as the "real estate
contract". It's usually a one to five page
document. When a purchaser signs "the purchase
agreement", they are signing an offer to
purchase their new home. When the offer is presented
to the seller, the seller can either "accept"
the purchaser's proposal or "counter offer"
back to the purchaser with a counter proposal..
When both parties to the transaction agree on
all terms, there is called "a meeting of
the minds". This is when the offer or counter
offer becomes a "contract".
Lead Based Paint Addendum
The "Lead Based Paint Addendum" is required
on any home built prior to 1978. This form puts
the purchaser on notice that there is/may be lead
based paint in the home. Lead was placed in the
paint of all houses built prior to 1978 to help
eliminate mold and mildew that would attack the
paint. We all grew up in lead based paint homes
and survived.
The federal government's concern is to make sure
children do not ingest lead based paint and end
up with physical impairments. The way most small
children are exposed to the paint is by placing
their hands on a window sill and then putting
the fine black powdery substance in their mouth.
The purchasers have the right to conduct a search
or assessment of the property for lead based paint.
In addition the purchasers have the right to waive
the assessment of the property. Probably 99.9%
of the time the purchasers waive the right to
inspect the home for lead. If the home was built
before 1978, obviously it's going to be there.
Residential Property Disclaimer/Disclosure
Statement
The Virginia Residential Property Disclosure Act
requires the owner of certain residential real
property is to be sold or leased with an option
to buy, to furnish to the purchaser either (a)
a RESIDENTIAL PROPERTY DISCLAIMER STATEMENT stating
that the owner makes no representations or warranties
as to the condition of the property, except as
otherwise provided in the purchase contract, or
(b) a RESIDENTIAL PROPERTY DISCLOSURE STATEMENT
disclosing defects in the condition of the property
actually known by the owner. Certain transfers
of residential property are excluded from this
requirement.
Basically, the disclaimer statement says the seller
is making no representations to the condition
of the property, but the purchaser can go ahead
and have the house inspected by a home inspector
to protect himself from unknown problems.
The disclosure statement is a more detailed history
of the house. It goes into detail about problems
that have been incurred with the home and when
the problem(s) was corrected. To me, a disclosure
statement is preferable over a disclaimer statement
because at least the seller attempts to tell the
purchaser where problems have been in the past.
Sadly, most attorneys advise their clients to
sign the disclaimer statement. The reason they
give is to limit the seller's vulnerability to
a lawsuit in the event the seller either intentionally
forgot or innocently overlooked to make note of
a problem(s) that had been encountered.
Disclosure Of Brokerage Relationship
This form is signed by both the buyer and seller
in the real estate transaction. They each sign
separate forms stating that they understand that
the agent who does not work for them works for
the opposing principal in the transaction.
First Right Of Refusal
The "First Right of Refusal" is a tool
that allows a buyer to enter into a contract to
purchase his new home contingent on him selling
his present home.
The advantage of the first right of refusal addendum
for the buyer is that it allows him to come to
terms with the seller of the home he is trying
to buy. It gives him the opportunity to put his
present house on the market and sell it.
While the purchaser puts his home on the market
for sale, the seller continues to keep his home
on the market.
Another advantage to the buyer is that when a
home has a first right of refusal on it, the listing
agent must tell all other agents who want to show
it that there is a "first right" on
the property. Often potential purchasers pass
on the opportunity to see the house because they
are not certain that after they negotiate with
the seller that they will ultimately end up with
the home.
The reason this could happen is that the first
purchaser who holds the first right of refusal
has the option to remove the contingency of the
sale of his present home and to present the seller
a loan approval that is not contingent on the
purchaser having to sell his present home in order
to close on his new home.
Usually in this agreement, the buyer is given
a 24 or 48 hour period of time to remove this
contingency and to provide the non-contingent
loan approval to the seller. The down side to
the buyer is that he can lose his new home because
someone else was able to give the seller a contract
that did not include the necessity of selling
a home
The advantage of the first right of refusal to
the seller is that they can have their cake and
eat it too. The seller is able to keep his home
on the market to attract another buyer. If another
buyer signs a contract, and they don't have a
home to sell, they can very likely buy the house
because more than likely the first buyer will
not be able to remove the contingency of selling
their home. Based on the first buyer not being
able to perform based on the first right of refusal
contingency, the seller will be able to void the
contract with the previous buyer and proceed with
the second buyer. |
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