What with all the hubbub going on about REO’s, foreclosures, short sales and new, bigger and better gurus popping out of the woodwork telling us they have the secret to “get rich” in today’s market, it is very easy to put some of real estate’s oldest maxims in our back pocket. That particular location, as you might guess, is not where they belong.
I don’t know about you, but yours truly has a tendency to want to get the deal done and NOW! Hang all the paperwork and inspections and everything else. Let’s close this afternoon.
If you think I may have shot myself in the foot once or twice, you are right. Fortunately the market was in upwards movement so I didn’t get hurt too bad. That is, I should have made more on the deal. Sigh…
Maxim One – Oral Agreements
I don’t care if you are dealing with your grandmother, commit those pesky details to paper and have all the appropriate signatures. That way you probably will get it right the first time. If not, a neat little thing called an Amendment can be written. I can remember a refrigerator causing me great anxiety. It was supposed to be left in the home or at least I remembered (at the time) being told it would be left.
It wasn’t. I would have sworn on a stack of bibles it was in the contract as staying. Good thing I didn’t have to swear in a court of law and the local big box store had a sale on refrigerators. I had to buy one as I had told the buyer the refrigerator stayed.
Maxim Two – Weasel Clause
Some people call this type of clause a contingency clause. I thought I’d be cute and use its street name. Some folks say you should have at least two in your offer. I think they are right so here are three excellent contingency clauses from which to select your two:
1) Mortgage financing — Some investors/buyers don’t have to concern themselves with finding financing. Wonderful, but does the seller really need to know that piece of information? I say they don’t.
Even if you are pre-approved, act like you aren’t. I don’t believe this is subterfuge at all. Think about it, what if there is a rat in the woodpile and you don’t know about it?
Next, think about the property. The lender more than likely will only make the loan with a formal appraisal of the property in place. This won”t guarantee the loan, but it will be one of the loan’s conditions.
2) Inspection — A month or two ago I made a post about one of my son’s friends buying a foreclosure but not having done any prior inspecting. It cost him a bundle. I don’t know about your thoughts, but mine say never buy an existing or new home without a thorough home inspection. I want to walk through the home, if possbile, with the inspector to learn more about the house. What better way to learn the concerns he or she may have about that piece of property?
3) Insurance — Regardless of what the TV commercials tell us, hazard insurance may be difficult or impossible to get in your area. Hence, you should confirm you can get adequate coverage. I own an insurance agency and I can tell you for a fact, insurance companies stop writing a particular type of coverage without announcing said termination to the general public.
Maxim Three – Read and Re-read
We all have a tendency to believe we know what we wrote once we write it. For example, we write an offer and hand it to the other party. It gets accepted faster than we can say happy birthday. When we get the acceptance back, we re-read the offer and see we didn’t include even one weasel clause. Oops…
When it takes only five minutes to re-read what we wrote, why don’t we do it? I don’t know the answer but I bet once we’ve been burned by our laziness, we become ravenous re-readers.
OK, the above maxims aren’t all inclusive but they are darned good ones to have at your fingertips. Remember, this may be a new real estate environment but the old tricks of the trade are still at the heart of the deal.