When making an offer on a property there are many contracts to use. I use the realtor form for the particular state I’m buying in, but you’ll want to take the realtor logo off the document because there’s no realtor involved.
There are two reasons you’ll want to use the same form as the realtors. The first one is in the event you ever have a seller say they want their attorney to review the contract before accepting. If you’re using the realtor type form then the only thing the attorney can say is “this is the same form that every realtor in the state uses”. The second reason is if you’re ever sued the judge might ask “who drafted this document?” and if it was you and its one-sided then it‘ll make you look bad.
To find the contract that your state’s realtors use, simply search online for your state and “realtor contract” or “real estate contract”. Ex: North Carolina Real Estate Contract. Do an advanced search on Google by selecting only PDF files. This way you’ll only get search results that are PDF files. Check with your local attorney to make sure you can do this.
It’s best to keep it simple and only put in enough clauses to protect you, but not so many that it will scare away your seller or realtor.
If you would like to use your own contract, I’ve included one in my Ultimate Buying & Selling Machine real estate home study course. It’s a simple, easy to use, one page contract. I’ve also included a more extensive contract that covers just about everything. I’d personally suggest using the simple form for buying and the detailed one for selling.
Everything above applies to consumer transactions. A consumer transaction is basically a transaction where you’re buying from someone who lives in a property or selling to someone who’ll be living in the property. Everything else is considered a commercial transaction meaning that you’re buying from a bank or investor and/or selling to another investor. In this case you’ll want to use your own form and make sure you tell your buyer to do their own due diligence.
Three “Must Have” Clauses
When buying property there are three clauses we use in our contracts.
The first clause is usually already in the contract and it’s: This contract is subject to a 15-day inspection and approval of the condition of the property prior to closing. Some sellers, depending on who it is, may not allow 15 days. That’s okay as long as you can get the property inspected prior to closing on the property. Always try to shoot for 15 days. We want to make sure this is in our contract.
The second clause in the contract that we always use is: This contract is subject to an acceptable appraisal. What’s an acceptable appraisal? Just keep it simple and tell them you’ll let them know when the appraisal comes in if it’s acceptable. We don’t usually get resistance.
The third clause we use is: The deposit shall be the sole remedy in the event of buyers default. Outside of these three clauses, I cannot think of anything else that you need on every contract. If you’ve already lined up your financing or have partners, private money or hard money then you don’t need any clauses about financing. In fact, you’ll get more offers accepted, approved and closed if you don’t use a financing contingency in your offer. With these other three, you don’t have to worry about it anyway. You have your out in the event that you need one.