Texas house hunters often go through many frustrating steps before they find the home of their dreams. Narrowing down the neighborhood, creating a wish-list and searching for a good deal on a mortgage is just scratching the surface. It can be an emotional rollercoaster, but once they have made an offer, one question may plague them until closing day: What if something goes wrong?
Fortunately, the real estate contract can go a long way toward protecting prospective buyers as well as sellers from those scary contingencies. If you are in the market for a house or other property, you should know that a real estate contract does not have to be a standard template with boilerplate provisions. You can negotiate to make sure the terms of your contract are in your best interests.
For your protection
The most basic real estate contract will include certain conditions, such as the terms of financing. A contract may be contingent upon the buyer obtaining financing, but you may want to make yours contingent on obtaining financing with a specific interest rate. Otherwise, you may end up bound to buying a home whose payments you cannot afford. You may want a contingency for obtaining a certain kind of financing, such as a VA or FHA loan. Failing to achieve this will release you from the contract without penalty.
Other conditions to consider in your contract include the following:
- Asking the seller to cover your closing costs or specifying which costs the seller will pay
- Allowing you to cancel the contract if the home inspection reveals defects that are too expensive or that the owner is not willing to repair or replace
- Specifying any items you want to convey with the home, such as appliances or fixtures
- Breaking the contract if you are unable to sell your existing home within a specific time frame
- Establishing a timeline for reaching closing day
The seller may also have contingencies to which you must agree or negotiate before signing. Of course, having these or any terms in your contract may be futile if you do not fully understand what they mean and how they affect you. This is why it is never a good idea to sign a real estate contract without reading it carefully and perhaps even seeking a legal opinion to minimize the chances that you will bind yourself to conditions that leave you no alternatives if the deal goes bad.