Conditions to have in your Real Estate Contract
When you are buying a house most people do not think about conditions that they should have in their contract. People buying houses are usually obsessed with price and closing date. There is much more that should go into your contract which could be deal breakers for some sellers. The terms of the contract are just as negotiable as the price and closing. In a sellers market many people waive clauses in order to make their offer more attractive to the seller. Since that market is long and gone this month, let’s focus on what buyers should be including in their contracts just to make the sellers squirm a little.
CONDITION #1 FINANCE: This should be included in order to confirm that you can get a final approval from your lender. Do not think a lender will give you the funds just because you got a pre-approval. In my past I have seen deals fall through when I was selling mortgages. For some reason the lender might not like the investment you are making. There could be problems with the house that you are over looking. An example would be if the house has a stigma associated with it. A five day clause should be included here and I would not waive it during a buyers market.
CONDITION #2 INSPECTIONS: A good overall inspection is a great way to insure that there is something that you or your agent cannot see. A good agent can spot most deficiencies but I will not go on a roof. An inspection should be done so you can have some piece of mind during this buying process. A word of warning, just because you have an inspection, do not think that there is something that cannot be missed. Inspectors are usually very thorough but they are human too and that’s why they have insurance to cover them. I would put a five day inspection clause in as well.
CONDITION #3 SALE OF HOUSE: Since it is a buyers market why not put in a clause that you have to sell your house before you will close. This might be a stretch in most situations but if the seller is really motivated and they do not have offers you could put this in the deal. Thirty days to sell your house is not out of the question. This is worth it if you are having doubts about selling your house. It could also avoid the stress of having to get a bridge mortgage if you don’t sell your house by the date of closing.
CONDITION #4 CLEAN HOUSE: I always put this clause in to make sure that the house is clean and garbage is removed. You can also put in a clause to make sure that the grass is cut. There is nothing worse than receiving the keys to your new house and having to clean up for a week.
NOT A CONDITION BUT A MUST, WHO TAKES WHAT? It must be stated what is going to stay and what is leaving with the owners, appliances, hot tub etc. This is extremely important when closing a deal. I take serial numbers and put that on the agreement of purchase of sale. Pictures are a good way to also make sure that the appliances you saw are still there on the day of closing. I would get very specific. Do not leave it to chance that something you like will be there, if you didn’t write it down it probably won’t.
There are a lot of other clauses you could put but I just listed a few. If you have any more questions regarding clauses don’t hesitate to email me or call me. Have a great week!
Are You Having Buyers Remorse?
Now that you bought your house, the market has slowed down. The prices of houses have dropped in your neighborhood. You see houses which are bigger and with more lot selling for cheaper than yours. You start getting buyers remorse. You say to yourself that you should have waited for the market to fall and buy a house which is cheaper and with more land.
All buyers say this to themselves when the market slows down. The housing market always goes up and down. Its the law of supply and demand. What goes up must come down. The government tries to help this law by changing interest rates and trying to control inflation. Its basic economics.
I think the media and people in general look at the market always in a negative attitude. You always see negative headlines or outrageous ones. The market is taking a dive! Watch out! Don’t buy now! Don’t sell now! It doesn’t matter what they say they always try to put a negative swing on things.
I live in the real world and yes some people pay too much for a house. Usually it is in a situation where people are paying 40% over market value. Ok I made that up. You get where I’m coming from. In a hot market you might get into a bidding war and over pay on a house. I know it happens and its not that bad unless you are paying a ridiculous amount over asking price; every situation is different.
Here are some things to consider when you are thinking you got into a house too fast:
Interest Rates: Yes the prices are cheaper now but you got your mortgage at a lower rate. Ask your mortgage broker to compare rates and how much difference that really is. When you calculate percentage points compared to how much you paid, you should come out ahead. This is true in most cases even if you paid higher than asking price for your house.
Selling price: You bought high and sold high. In most cases it evens itself out. Don’t be greedy. People always think negatively in this situation. Sellers always think they should make a ton of money on the sale of their house. Yes you want to make money but sometimes you must close the deal rather than wait for a higher bidder. The Seller always thinks they should have waited for more money when selling their house. My advice is to sell the house, make your money and close the deal. Don’t turn down a good offer in the hopes that another one might come. A better offer might not come and now you have to give a discount because your new house is closing soon. Don’t let your ego get in the way of a good deal.
Real Estate Goes Up: In the GTA Real Estate value goes up. It always does. Yes it goes up and down but over time it is on an upward trend. You must look at the long term stats. Do not look over 2 to 3 years, look at 5 to 10 years. Even if it goes down over a couple years, if you keep the house long enough the property will go up. You will be able to breath after your equity and value catches up to your need to win a house in the bidding competition.
Life Lesson: You will learn a life lesson which could possibly change your life. You will learn to be a little more patient and you will also learn to let go of your need to win. Sometimes it is ok to walk away. Walking away from a house is not the worst thing in the world. I know you have invested time and thoughts thinking about this house. You have dreamed about living in this house, thinking how your furniture will fit in the family room. Then you get into a heated bidding war. You call your agent and tell them to take away all conditions and bid 30 grand over asking. Then you find out that the roof is leaky and a few months later the same model house down the street sold for 5% less than asking and it has a pool with a new roof.
It happens to us all in some form or another. I have done it myself and its okay; you will live. You will be very cautious the next time you buy a house. My advice is to enjoy your house to the max and be thankful that you got what you wanted. Don’t let people discourage you from your purchase. You could look at the purchase another way, buying another house for the right price might not be what you want but it is economical. Just because it is economical you might not enjoy the house. I believe value is different to different people. It is the reason why two different appraisers can give similar but different values to a house.
I believe that using a Real Estate agent who is looking after your best interests should be the cooler head here. I take a step back and say to my clients in heated situations, “Are you going to be okay with paying 20k more than asking and the possibility of the market dropping 5k below this asking price?” Usually when I say that to my clients they cool down a bit.
Be positive about your purchase. Why would you want to live your life saying to yourself everyday, “I got the house I wanted but I overpaid for the house”. The better thing to say is, “I found a house I loved, and I paid what I thought it was worth. I’m so glad I did instead of buying a house I don’t like!”
I hope you have a great week and remember when you are in a heated negotiation, take a step back and say to yourself, “If I wasn’t in this bidding war, would I pay this amount for this house and is it worth it to me!”
I recently showed a few houses to a couple clients of mine. I started to focus on something in each house. These thoughts might be irrelevant but I thought I would share with you.
I started to dwell on where sellers are placing their flat screen Televisions. I saw something bizarre in one home. I saw a flat screen mounted over a real fireplace. It just looked strange to me.
Another thing that I questioned was now that they bolted a bracket to the bricks above the fireplace, how would that look if a couple decided to move the bracket. I also thought, you cannot use the fireplace without frying your t.v.
If somebody buying the house removed the bolts for the bracket, they would have to fix the bricks or there would be four holes there. I’m not a brick layer and I’m sure it could be fixed, but it seemed weird to place a t.v. there in the first place.
In another house this owner placed the television on a huge cabinet which held the t.v. pretty high with drawer space below. It looked nice but when I sat down these cabinets make you look up. I don’t know how I could sit back for 3 hours and watch a football game. What if I wanted to lie down on the couch. It seems uncomfortable.
I also saw a few houses with the flat screen below on stands. I didn’t like the stands in particular but it seemed more natural than the other houses. I did see one stand at best buy which would look great in many houses, I don’t know why more houses do not buy that stand. I guess its just my opinion. So I guess I would like to know what you have in your house or what is your opinion. It’s a matter of the living space I understand but I like the flat screen on its own feet on a stand rather than on a bracket, which is expensive as well. I also do not like the fact that you must break the wall and repaint. Or else you will see wires there which is an eye sore. Let me know what you think!