Real Estate Investment Contract Clauses


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Offers and contracts are these biggest and stickiest subjects that real estate investors have to deal with. Whether you are purchasing the property yourself or selling it, the offer and contract can make life a little crazy on both sides. If the wording is incorrect or something is left out, it could end up costing the investor multiple thousands of dollars. In some cases, it may cost investors as much as hundreds of thousands of dollars.

The way to avoid this is to work with your professionals. Professional real estate agents, real estate attorneys, and CPAs will tell you if there is a problem with the way the contract is worded. They should also explain the contract to you in its current state and bring up any areas of concern. If you are the one submitting the contract or offer, make sure that your attorney is the one that writes the contract. That way you know that your best interests are being covered in the contract.

Before you sign any contracts, there should be a clause or clauses in there that look out for the best interests of the buyer and the seller. For the seller, the contract is void if within 15 days the buyer does not provide accurate financial information proving he can pay the amount offered. He should also supply a down payment of X amount of dollars. By having this in the contract, the seller is assured that the buyer is truly buying his house and not holding on to it temporarily while trying to find someone else to buy it from him.

For the buyer, there are a few clauses that should be included in the contract. They are slightly different for residential and commercial investments. For residential contracts, it should state that the seller has to provide accurate inspection reports as well as appraisal documents within 15 to 30 days. This prevents the constant dragging out of sales that drive buyers and sellers mad. In addition, sellers have to repair, replace, or be willing to reduce the price of the property to make up for whatever is found in the inspection report. With as is sales, the reduction in the price of property is the key term to be used. If not, the buyer has the right to void the contract.

For commercial properties, the seller must provide within 15 to 30 days accurate financial statements and information. These should include: rent roles, rental contracts, financial spreadsheets of expenses and income for the last few years, and tax returns of the property for the last few years. If not provided or found lacking, the buyer may void the contract.

Your real estate attorney will be able to word these according to the state’s real estate Legal-ease. However, having these in your contracts will save your wallet a lot of money.

For more information on real estate investing, call or visit us at Homevestorsfranchise.com. Our company is the nation’s leading real estate franchise with over 15 years of experience selling and buying as is homes. We have a varied assortment of real estate investment and real estate franchise opportunities available. For more information, call or visit us today.

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