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The last point to my business model triangle is learning the forms. Washington State has over 200 of them. That’s a form for every scenario that you can think of and yes…I have to learn what all those scenario could be. This is why you hire a professional to buy or sell your home.
This last week I was given the assignment to write a purchase and sales agreement from start to finish. So I set out to pick my practice property and begin writing it up for my fictional buyer. My dog, Cooper, was going to make an offer on a lovely 3 bedroom home in the neighborhood I grew up in. After reviewing the manual, I thought, “I’ve got this”. HAHAHA, Man was I wrong!
After sitting down with my managing broker, we went line by line through the purchase and sales agreement. I had the key components for making the offer, I named the parties involved, had a legal description of the property, had the purchase price but I was missing my fictional clients back story. Meaning, what kind of buyer was he? Knowing more specifics would have helped me a great deal.
My offer fell apart when I didn’t attach the necessary addendums. These forms identify the specifics of the offer. After some thinking, I decided Cooper’ was a first time home buyer. So he would be getting an FHA loan which requires a 3.5% down payment. He wants the offer to be contingent on an inspection and title as well as his ability to get financing. Needless to say I was missing a few key elements.
Now that the back story was in place, I should have filed the following forms with the purchase and sales agreement: Financing, because Cooper is not a cash buyer. Receipt of earnest money, Cooper wants his offer to be taken seriously by the sellers so he has put a $2,000 deposit down. Evidence of funds, Cooper will need to prove that he has the $2,000 in his bank account. Next, a title contingency, just in case there may be a lien on the property, the title needs to be marketable. Optional clauses is next, this covers title insurance, items left by the seller, utilities or leased property such as satellite dishes. The inspection form, this is a big one because after defects of the home are exposed some buyers determine the investment is not worth the amount of money it would take to fix the defect. So the inspection contingency allows the buyer to terminate the contract should they want to. And lastly, homeowners insurance to protect your asset once the purchase is finalized.
Theres a lot of stuff to know when it comes to real estate so if you don’t mind, I think I’ll pause the blog for a moment while I go back to memorizing all 200 forms so that I’m at the top of my game for my clients.
Until next time,
Elizabeth
