The most widely used purchase agreement in the Osceola County area is the FAR/BAR Contract for Sale and Purchase which has been approved by both the Florida Association of REALTORS® and the Florida Bar. Since the purchase of a home is usually the biggest single investment most people make in a lifetime, it does make sense to understand a document which legally binds you to make that investment. And certainly sellers need to understand this document as well.
Without going line-by-line through all the lines of the contract, you can expect to see the following subject matter outlined within the FAR/BAR Contract for Sale and Purchase.
The advantage of this standardized form is that REALTORS® are familiar with the contract and the provisions it contains. Thus, this familiarity leads to REALTORS« being able to clearly and accurately explain each provision to you. And be sure that your REALTOR« takes the time to thoroughly go over the entire contract with you, making sure you understand and agree with what is being presented. The ultimate result of the use of this standardized form: Sellers and buyers being able to concentrate on things that are more important to them, such as preparing to move! Contracts can be scary, especially if they are thrown at you without any guidance. Your REALTOR« will not only serve you throughout your real estate transaction, but he or she will also ease those fears and make the sale or purchase of your home a most pleasurable one.
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Let's say you rent a tuxedo or put a gift in law-away or buy a used car, and you want the dealer to hold it for you. What do these things have in common?
For each of these transactions, you are required to place earnest money down. Earnest money? In terms you are probably more familiar with, a deposit.
The term earnest money isn't that common anywhere but in the real estate industry. That's why many potential home buyers, when they make an offer on a house, are thrown off-guard when asked how much earnest money is going to accompany the offer. When you think about it in terms of placing a deposit down on the home you want to purchase, it's not quite as confusing. Yet, not knowing the ins and outs of earnest money can lead to a potentially confusing situation.
Earnest money is just what it says: a financial pledge from the buyer to fulfill the terms of the contract offer presented to the seller "in earnest."
At the time of closing, this earnest money is returned to the buyer or credited against the selling price. If the transaction does not close, the money is returned to the buyer as long as the failure to close was due to no fault of the buyer.
If failure to close is with the buyer, though, the money is then generally forfeited to the seller as a way of compensating the seller for the loss of time the property was off the market.
Earnest money deposits are involved in nearly every real estate transaction. Although not essential to the creation of a valid and binding purchase agreement, it is the rare residential real estate transaction that does not require the buyer to make an earnest money deposit.
Why is this? Simple -- the earnest money deposit demonstrates to the seller that the buyer is quite serious about his or her offer. Although the amount of deposit is usually not dictated, it is usually enough to motivate the buyer to take whatever measures are outlined in the contract in the time frame specified.
One way you can help the home buying transaction go smoothly is to be aware that an earnest money deposit will be asked for and be prepared for it. Don't be surprised at contract negotiation time and then provide only part of the sum or a promise to "get the check to you soon." Your REALTOR« cannot indicate on the contract that he or she has received the earnest money deposit when, in fact, he or she has not.
As previously mentioned, an earnest money deposit is not mandated by law. But the administration of the earnest money deposit does fall under state regulatory scrutiny to protect the consumer.
Generally, earnest money must be deposited in this account within a reasonable time after the receipt of the offer. It is recommended that this deposit be made within 24 to 48 hours of receipt.
However, the purchase contract used by the members of the Osceola County Association of REALTORS« clearly states that the earnest money will be deposited "promptly after acceptance of this offer or returned to purchaser upon request if this offer is not accepted." The broker can wait until the offer is accepted to deposit the earnest money within a reasonable time from acceptance of the offer.
Remember that your REALTOR« serves only as a "caretaker" of the money. Should any dispute arise between the two parties to the transaction as to who should get the money in the event the property does not close, the broker must keep the money on deposit until the dispute is resolved.
What if a buyer is unable to go through with a purchase agreement due to being turned down for a loan, for example, and the seller refuses to sign the earnest money release form? Unfortunately, these kinds of disputes are often resolved in court. The buyer would need to file in small claims court (depending on the amount of the earnest money) in order to have a judge tell the broker who should get the money. Unless both the buyer and seller agree on who gets the earnest money, the broker must await a court order before releasing the deposit to either party.
In the vast majority of cases, though, earnest money is collected, the process continues smoothly and the deposit is returned as indicated in the contract.
Nevertheless, it is easy to see the importance of earnest money to the real estate transaction. In the same sense, it is easy to see why it is important to work with someone qualified and experienced during such transactions.
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A home inspection --What is it? Is it a necessity? Who needs it? These are all typical questions that run through the minds of those involved in a real estate transaction. Let╣s take a look at each of them
What is it? A home inspection, as defined by the American Society of Home Inspectors (ASHI), is a professional, objective visual examination of the condition of a home. It helps to determine whether there are any major defects or system inadequacies before the sale of a home goes through, thus preventing any unpleasant surprises later on.
A home inspection can be performed by either individual contractors or tradesmen, or by a "whole house" inspector. There are advantages to each type of inspection method, and you should consult your REALTOR« as to which type of inspection best suits your needs.
ASHI stresses that home inspections are not intended to point out every small problem or any non-visual defects in a home. In fact, a home inspector is looking for only serious problems that affect the "habitability" of the home. Minor, routine maintenance and repair items that have already been disclosed on the Residential Property Disclosure Form are not a concern of the inspector. For example, dripping faucets, a cracked driveway or stains in the carpet do not affect habitability. A malfunctioning furnace, a leaky roof or dangerous wiring does.
A word of caution: a home inspection should not be confused with an appraisal. Although they may seem to be the same, they each serve distinctly separate purposes. A real estate appraisal determines the value of a property; the inspection concentrates on the condition of the property. And, an appraiser works for the bank or for the mortgage company; an inspector works for the purchaser of the home and, sometimes, the home seller.
Is it necessary? No, a home inspection is not necessary, but in most cases, is highly recommended.
The purchase of a home is usually the single largest purchase ever made by an individual. When making any type of major purchase, isn't it nice to have a little piece of mind that your purchase has no defects or any hidden surprises? A home inspection gives you that.
Not only do they provide piece of mind, but ASHI points out that home inspections also highlight the positive aspects of the home. In fact, many of the home inspector╣s observations or recommendations help to dispel home buyer anxieties and provide useful repair and maintenance suggestions.
A Home Inspection helps dispel any anxiety the buyer may have concerning the purchase, and it can save a buyer from a potentially bad investment. All in all, the home inspection increases the buyer's satisfaction with the completed sale by helping him or her to make an informed decision.
Pre-listing inspections are becoming very popular ways of assisting sellers to identify necessary repairs, says ASHI. These inspections help them to prepare their property and set an equitable price for quicker and smoother sales. In essence, it offers the seller piece of mind as well!
Home inspections are a great way to protect yourself from the unknown, be you a buyer or a seller. Be sure to let a REALTOR« serve you in your next transaction.
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For many buyers, what is included in the sale of a home is often vague. According to the standard purchase contract used here in Florida, the sale of a home includes all "real" property (or "real estate") meaning the land and everything that is permanently attached to it (including the house, trees, fences, etc.). Personal property, items that are not permanently attached (such as paintings, area rugs, furniture, etc.), are not included in the sale.
Questions often arise when negotiating a purchase contract, however, over those items of personal property that have been converted to real property by attaching them to the home. These are called "fixtures," and include window coverings, built-in appliances, television antennas, light fixtures, mailboxes and so on. Are these included in the sale price? To a great extent, the answer depends on you.
Built-in appliances are usually included in the sale. Often, free-standing appliances, such as the washer/dryer, refrigerator and stove (although technically personal property), can be included if the buyers specifically request them in the purchase contract and the sellers have no need of them in their new location. But don't assume they will stay. Unless they are specifically included in the purchase agreement, the sellers are under no obligation to leave them. It is also wise to remember that any appliances you do request are often not warranted. Make sure they are in good working order before you request them.
If there are appliances you don't want, such as that old freezer in the basement, make sure you put into the contract that the sellers must remove the item before closing. The last thing you want to do when moving into your new house is be responsible for hauling out the previous owner's junk appliances.
Don't make the mistake of assuming that all fixtures will be included automatically in the sale. A good REALTOR« can help you specify items in the purchase contract so that you receive all the items you wish, such as fireplace tools and grate, pool and spa equipment, microwaves, water softeners and all window treatments (including shades, blinds, sheer curtains, draperies, rods, etc.). Bear in mind, though, that sometimes the seller will want to exclude some or many fixtures from the sale of their property for personal reasons. The most common exclusions are unique light systems. It is always wise to be sensitive to these exclusions for the sake of the larger deal. Purchase contracts commonly used in Florida all include space for buyers to specify which fixtures they desire as well as space to write in items of personal property they would like the sellers to include in the sale.
Some sellers may be annoyed at requests that personal property be included, such as the matching bedspread that goes with the Master bedroom window coverings. In these cases, it is best to ask your REALTOR« to check with the Sellers, or the Seller's REALTOR«, before you start asking for personal property.
Working with a REALTOR« is the easiest and safest way to make sure your purchase contract is written to your desires, needs and benefit. Your REALTOR« can help you specify those properties and fixtures -- real and personal -- that can help begin making your new house your new home.
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