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Home Contract Negotiation
When it comes to home contracts when purchasing a home, many people think that whatever is in the contract is set in stone. While some things are, there are other aspects of the contract that can be negotiated and by knowing what these things are you can save money in the transaction. Therefore, before you decide to firm up a price with a seller, you should consider a few important factors.

You will need to determine the estimated transaction costs as well as who will be responsible for paying them. Generally, these costs would cover attorney fees, title search, credit check, termite check, home inspection, recording fees, transfer fees, administration fees, and so on. Depending on your specific situation, it is possible that not all of the fees listed would need to be paid. Additionally, you can negotiate for the seller to pay some of these. By working with a good real estate agent and lender, they can help you with this negotiation option.

You also want to identify how much money you as the buyer will have to put into the escrow account and how quickly this will have to be done. The deposit you will put down on the house to show the seller you are a sincere buyer is called earnest money. The more you put down the most serious you are in the seller’s eyes. The quicker this money can be paid and transferred into the escrow account, the happier the seller will be and the more willing they would be to negotiate other factors.

Unless you plan to pay cash for your home, you want to make sure your contract has a mortgage escape contingency clause. If you choose not to have this or it is missed, you would be legally liable to purchase the home even if you are unable to obtain financing. Additionally, make sure your contract does not have any type of open-ended statements saying you will obtain the financing “at the prevailing rate of interest”. These types of statements expose you to being hit with interest rates that are unstable and fluctuate often. Instead, you want the statement to say, “not to exceed x%”.

Another important part of the contract negotiation is get in writing exactly what fixtures and appliances will stay with the home. In most cases, any permanent item installed or affixed would stay. All other items such as refrigerator, stove, chandelier or special lighting, birdbath, window covering, and so on, would be negotiated between the buyer and seller.

It is also important to understand the consequences if buyer or seller should breach the contract. Remember that a mortgage contract is serious business and a binding contract. As the buyer, if you put a deposit down but fail to follow through with other requirements, you would lose that deposit. A seller who backs out without some type of emergency could be sued. Therefore, before you put your deposit money down make sure you understand this aspect of the contract as unexpected things do occur.

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