How to bulletproof your purchase offers
As an investor, one of the constant battles that you will always face is figuring out ways to reduce the risk of your investments . The more experience that you gain, the better you will become at reducing your risk as an investor . One trick of the trade that will help you reduce your risk is having purchase contingencies in your purchase contracts.
Here are the top five purchase contingencies that can help you achieve this:
1) Home Inspection: In most states, the seller is obligated under law to disclose all known defects of the property in written form as part of the purchase contract. Since the inspection may take place after the offer is accepted, a good thing to include in your contract is a home inspection contingency that states that the entire deal is contingent upon an acceptable inspection report. If an inspection finds that there is: termites damage, roof problems, or major structural damage you can state in the contract that the seller either has the option to correct the issue prior to closing or compensate you monetarily for it.
2) Financing contingencies: Makes the deal contingent upon your ability to secure a financing to make the purchase. If you can't find a loan, you will not be bound the contract. It's not a bad idea to use this sometimes.
3) Items included in the purchase: Major appliances, lighting fixtures, shrubbery, etc. Try to sweeten the deal for yourself . It never hurts to ask and you might surprise yourself.
4) Title Contingencies: Your attorney or title company will do a title search to make sure the property does not have any legal claims against it and that the seller holds a clear title to it. This is a good contingency to add because you will be free to walk away from the deal if the title is "cloudy." If you are unaware of what a " cloudy" title is:
An actual or apparent outstanding claim on the title to real property. "Clouds" can include an old mortgage or deed of trust with no recording showing the secured debt was paid off, a failure to properly transfer all interests in the real property (such as mineral rights) to a former owner, a previous deed which was improperly written or signed, an unresolved legal debt or levy by a creditor or a taxing authority, or some other doubtful link in the chain of title. Often the "cloud" can be removed by a quiet title action, by finding a person to create or execute a document to prove a debt had been paid or corrected. Title companies will refuse to insure title to be transferred with a "cloud," or they will insure ownership except for ("insure around") the "cloud.
5) Timeline: A deadline for responding to you deal is always a good idea to add to your contracts because you will know when to consider your offer rejected and you can move on to finding another deal. When writing an offer,a good rule of thumb is to allow three days for the seller to respond.
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