I am finishing the renovations on my first flip and have a potential buyer who has verbally made an offer on the house. Since I have not listed the house with a realtor, what is the best way to handle the contract negotiations? I know the purchase agreement will need to be in writing. Is the best approach to have a real estate attorney draw up the documents? Can a realtor write up the documents or will they charge a large commission? Charging a 6-7% commission with little to no effort seems outrageous. I have not accepted any offer and will likely counter. Since this is my first house, i want to make sure I don't make any mistakes.
If your jurisdiction (i.e. state) has a standard contract for residential real estate, you can use it ... at lease as your base and have your lawyer assist with drafting any additional clauses or schedules.
Here we use lawyers to close, so the lawyer would have a look over the contract anyway.
Roy is correct - most state have a standard offer to purchase contract that is used for residential purchases. Your state may use title companies instead of attorneys, but that is more geared towards closing. If you don't feel comfortable drafting the contract - an attorney could likely help you for a few hundred dollars. The goal is to come to an initial agreement with the buyer before getting anyone else involved.
Thanks for the quick response.
Yes, the state of Indiana has a standard form to use. I wanted to make sure that all the proper documents are filed (i.e. Disclosure Statement, Purchase Agreement, etc.). The other concern is that I don't agree to something I didn't expect to. For example, seller pays all closing costs. I am OK with this and can negotiate the purchase price according to what I think is a fair price, as long as I know the value of closing costs. I am thinking appraisal, title insurance, survey, attorney fees (to assist with purchase agreement). Property taxes will be prorated to the time I owned the property. Have I missed anything? All total this would be somewhere around $2,000 plus taxes.
Sit down with an attorney/title co. You'll find out what is traditional I. Your area. Do Not agree to pay "all closing costs" if the buyer is getting financing, there will be an argument about the 4-6% in fees, prepaids, etc. the buyer needs to pay with a financed deal. Appraisal is not considered closing costs, it's a requirement for financing cost. Your state realtor's contract usually dictates normal seller costs to the seller, normal buyer costs to the buyer, etc.
You've given me some things to think about. I didn't think the fees associated with financing the deal would be considered part of closing costs. I will do more investigating before I agree to anything.
Thanks for the advise.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!