The Smart Buyer's Purchase Contract

Avoid leaving anything to chance. Be sure your offer includes these key points.

A written and signed (ratified) purchase offer can bind both you and the seller. Whether it's called a contract-to-purchase, purchase agreement, an offer, or earnest-money agreement, you can be held to your offer once it's signed by the seller. If you leave anything out and the seller accepts and signs the contract, you've lost the ability to re-negotiate.  Once you have an agreed (executed) contract, you must uphold your end of the bargain and the seller likewise.  If you attempt to re-negotiate terms, the seller has the option of agreeing to your new terms or holding you to the fire.  If the seller has received another offer after they accepted yours, they will undoubtedly keep you to your original offer. That's why your purchase offer must cover every minute detail and aspect of the sale, such as:

• The amount of deposit (earnest money).  This amount will go towards the purchase price but shows good faith towards the seller upon initial negotiations.  There is a possibility of loosing this money if you decide not to complete the transaction.  A good contract will protect that money for you.

• Your name as buyer and the property owner's name as seller.

• The total purchase price.

• Full legal description or TRS and street address of the property.  It helps to include tax ID numbers as well

• The closing date.  This date should allow enough time for finanincing to process and for you to complete necessary inspections

• Any items you wish to have left in the house.  Make note of any items you wish to remain which are considered personal property.  This may include a free standing range or refridgerator.

• Any repairs you want the seller to complete prior to closing or any inspections you want to complete during your investigation period.

• If there is a tenant who you wish to vacate prior to closing, this also must be specified.  Remember, tenants require a 30 day notice before being ordered to vacate so allow the seller enough time to vacate the home.  This can get tricky, so consult your Realtor before agreeing to close prior to the tenant vacating.  The tenant will become your responsibility if they remain in the property after the sale is final.

• The secret to a complete offer is in the details.  An experienced agent can help you identify items which you may have overlooked initially.

Your offer contract should also contain important protective and escape clauses making the entire agreement subject to, or contingent on, their fulfillment. Here are some key "subject to" clauses and useful contingencies to consider:

Earnest money. Ensure that your earnest money which will be deposited in a trust account or with a neutral third party, such as a title company, escrow service or attorney acting as an escrow agent is protected. If you're putting up a large earnest-money payment, stipulate that it shall not be forfieted if you chose to terminate the transaction based upon the result of inspections or your ability to finance/afford the home.

Deed and title condition. Your offer should state the type of deed and condition of title you'll accept from the seller. Your contract should also make clear what actions the seller must take to deliver a good title by settlement, and what recourse you have should that not occur.

Financing. Make your offer contingent on getting a written loan commitment within a specified time and at terms agreeable to you.  Futhermore, make the offer contingent upon qualifying for the loan of your choice.  Often times pre-approvals are granted based on stated information.  The bank may not qualify you if they find a mark on your credit that you did not report.

Seller financing. The terms and conditions of any seller financing should be fully and exactly set out in the contract.  From the interest rate to the amount of time the loan is amortized over, this information needs to be spelled out in it's entirety.  Also, you will need to agree on who will handle recieving the payments and how (between you and seller) that third party is paid.

Settlement date and possession. The sale should be made subject to a settlement date and when you will be entitled to take physical possession of your new home. Settlement usually correlates with the length of time that's required for a title search and mortgage approval -- typically 45 to 60 days. Possession usually occurs immediately after settlement.

Settlement agent. The contract usually specifies the attorney or title company that will perform final settlement services.  Similar terms include: Escrow agent, Title coordinator, Title agent, or

Prorating. The contract should state that property taxes (among other things) will be prorated to the closing date.

Sale of current residence. If your purchase of this house is contingent on the sale of another, this should be carefully stated.

Response time limit. Your contract should require the seller to accept the offer in writing within a certain time -- usually no more than 48 hours -- or the offer will be void.

Home inspection. This contingency clause gives you the right to have the property inspected and to withdraw your offer if the inspection report isn't satisfactory to you for any reason. It may also allow for price adjustments to pay for any necessary repairs.

Environmental tests. You may want to include a clause requiring that the property be tested for radon, lead paint, or asbestos depending on the year the home was built.

Termite inspection. It may be customary in many areas for the seller to order and pay for a termite inspection. There is no obligation on the sellers side to be responsible for any inspections.  In Oregon however, the seller is responsible to provide the buyer with potable water meaning if the property is served by a well or spring, it must be clear of coliforms and nitrates.

What goes with the house. Specify what furnishings -- such as curtains, rugs, chandelier, and so on -- are included in the sale.

Condition of house at settlement. Specify what must be in demonstrable working order at the time of settlement, as verified during a final walk-through of the premises a day or so before settlement.