Everything in a real estate contract can be negotiated with the exception of what is required by state law. It's not always a good idea to go with the standard purchase agreement when you're looking for the best deals. However, when you draw up your own purchase agreement, it's always good to have it reviewed by a real estate attorney.
We all know that the price a property sells for is one of the most important parts of the deal. Both the buyer and seller want to feel they got the better deal. As a buyer, you can often come out on top by offering full asking price but getting concessions in other areas. Take for example two almost identical houses in the same neighborhood, both sell for $175,000 the same week.
One buyer pays full price without asking for any concessions. The second buyer pays full price but has the seller contribute $3,000 of his proceeds towards the buyers closing costs. Both sellers feel like they received full price from the deal but the second buyer walks away from the closing table with $3,000 still in his pocket. The concession(s) can be any of many things the buyer might want. It can be a new exterior coat of paint, new carpet, new kitchen cabinets, or anything else.
When you do think the seller is asking for more than the property is actually worth, a good strategy can be including lower comparable sales with the purchase offer for similar properties in the neighborhood. The listing agent almost certainly used the highest comparable prices to obtain the listing. There will be lower comparables out there. Also, offering to close the deal fast to put the sales proceeds in the sellers bank account faster can motivate a seller to accept a lower price.
Every purchase offer needs to include an inspection clause. The inspection clause should make the final purchase offer contingent on the buyer accepting the inspection report. An inspector doesn't issue a pass of fail grade for the property. The inspection report only provides the buyer with information about the condition of the property. In the end, the buyer can keep the purchase offer on the table as is or can make a new offer based on the result of the inspection.
Even brand new houses have small flaws turned up by the inspection. Never expect a perfect inspection report. What's important is that an inspection contingency clause opens the purchase offer up to further negotiation. Whatever is listed as a discrepancy in the report, creates an opportunity to counter offer with a lower price. Or to change any terms and conditions that you aren't satisfied with in exchange for accepting a less than perfect property inspection report.
Addendums to standard purchase offers can be a good way for a buyer to ask for concessions or improvements to the property as part of the purchase offer. However, the seller is never required to accept the addendum. Confusion can be created if the seller only signs the purchase offer but not the addendum. What the seller is communicating is that he or she is accepting the standard purchase offer but not the addendum. Before moving forward with the deal, the buyer needs to make sure both the purchase offer and the addendum have been signed by the seller.
A special addendum can be used by the buyer (or seller) to obtain almost any special condition to the sale. It might be for a home warranty or for partial seller financing or just some new carpet. First time buyers and experienced buyers alike should always consider the power of an addendum to improve the terms and conditions of the purchase.
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Author bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.