In my last post we discussed what price a Spring TX first time home buyer might want to offer. In this post I am going to discuss the other items that we will need to negotiate. In Texas we have an 8 page resale contract. Price is what most Spring TX first time home buyer's think of when making an offer but there are a number of other terms that will also need to be negotiated.
I am going to go through the items on our Texas contract that I expect we will be negotiating.
Section 3 - Sale Price- I covered this extensively in my last post Spring TX First Time Home Buyers Guide - Part 4 - What price do we offer!
Section 4 - Financing - The only way we would not mark this sections is if you were paying cash for your transaction. If you are getting a loan we will be marking that "this contract is subject to buyer being approved for the financing described in the Third Party Financing Condition Addendum". We will be attaching the Third Party Financing addendum and it goes in to more detail about whether your financing is going to be conventional, FHA or VA.
Section 5- Earnest money - In our area it is typical to put either $500 or $1000 Earnest money down (depending on the price of the home). If the home is over $250,000 there's usually more earnest money put down. In other states it is often 1% of the purchase price; for the most part that is not the case here in our area of Texas. This is the place where we also decide what title company to use. When the seller pays for the title policy they often feel they should get to choose but it is a negotiable item between the buyer and the seller. Please note as soon as we finish negotiations the Earnest money will go to the title company we have chose and they will cash the check and hold the money in escrow.
Section 6 -Title policy and the survey - Typically in our area the seller pays for the title policy and the buyer pays for the survey. This is however totally negotiable between the buyer and the seller. If the seller has an existing survey this is the place where we request it. Most lenders will allow an old survey to be used if the survey has been done within the last 10 years and if nothing has changed. If a pool or fence has been put in then the survey will need to be re-done.
Section 7 - Property Condition-
7B- Seller's Disclosure notice pursuant to 5.008 Texas property code (notice) - This is where we mark that you have seen the seller's disclosures. If you have not seen the disclosures then we will mark how many days the seller has to provide it to you and you may back out if you see something you don't like in that amount of negotiated days. The one exception to providing a seller's disclosure is a foreclosure. The seller of a foreclosure is not required to furnish the notice under the Texas Property Code.
7D - Acceptance of Property Condition -You either accept the property in its present condition or there is a place that you can ask for specific repairs and treatments. I will be covering this in more detail when I write about the termination option.
7H - Residential Service Contracts - In today's age most sellers will pay for a buyer to have a one year home warranty. If there's a pool or spa we will typically try to negotiate coverage on that also. This is a totally negotiable item and if the seller declines you can still buy a policy yourself when we close. As I said most sellers will pay for a 1 year warranty but foreclosures and relocation companies may not offer this to the buyer. We will of course ask for it as all they can say is no.
Section 9 - Closing - This is where we put the closing date. I have found that this item often requires as much negotiation as the sales price.
Section 10 - Possession - We will either mark that possession is on closing or funding or it will be according to a temporary release. I almost always mark that possession is on closing and funding but if I was representing the seller I would come back and ask for closing plus 48 hours. Typically in that case there is not any money involved but it gives the seller time to get out. I have heard nightmare stories of the seller moving out and then everything fell apart. This is something that should be negotiated at the time we write the contract but it is something that I have found often comes up later.
Section 11 - Special Provisions - Rarely do I have to write anything in special provisions. On our old contracts we often wrote lots of items in this section but when the contracts were overhauled years ago they left no stone unturned or very few.
Section 12 - Settlement and Other Expense - If we are going to ask for any help from the seller with closing cost this is where it will go.
Section 16 - Mediation - Typically we are always going to mark that you would agree to mediate before you will sue. The exception on this is again foreclosures and relocation listings. They will typically not allow you to mark "will" on this.
Section 21 - Notices: - This is a place for you to write all your contact information.
Section 22 - Agreement of Parties - This is where the addenda we are attaching are marked. Typically we will have marked Third Party Financing Condition Addendum and Addendum for Property Subject to Mandatory membership in a Properties Owners' Association.
Section 23 - Termination Option - In this section you can put an option fee amount and a number of days. Typically this will be $100 and 10 days but again this is totally negotiable. This gives you the unrestricted right to terminate for the amount of days that we negotiate. This is the time to get your inspections done. I will be discussing this in more detail in my next post on home inspections. I always mark that the fee will be credited to you at closing. Time is of the essence for this paragraph and strict compliance with the time for performance is required. During this option period you may back out at an time and all you lose is the option money. The earnest money you put down will be refunded to you.
As you can see there are lots of items for the Spring TX first time home buyer to negotiate. I never fail to be amazed at what can end up being a hot button. I recently had someone buy one of my listing who could not agree on the Title Company on a prior home that they made an offer on. That one was amazing to me.
My job is to ensure that as a Spring TX first time home buyer you have the tools and information you need to make an informed decision. I will help you prepare the offer. Then I will present it to the seller on your behalf and try my best to get it accepted at your price and terms! My next post will be on the option period and the inspection.
This is a Spring TX first time home buyers series and as I add additional post I will add the links. Please feel free to visit my prior post.
- Spring TX First Time Home Buyers Guide - Part 1 - Loan Pre-approval!
- Spring TX First Time Home Buyers Guide - Part 2 - The Web Search!
- Spring TX First Time Home Buyers Guide - Part 3 - The Home Search!
- Spring TX First Time Home Buyers Guide - Part 4 - What price do we offer!
- Spring TX First Time Home Buyers Guide - Part 5- The Home offer!
- Spring TX First Time Home Buyers Guide - Part 6 - The Texas option fee and your home inspection!
- Spring TX First Time Home Buyers Guide - Part 7 - The Title policy
- Spring TX First Time Home Buyers Guide - Part 8 - Why you need to live in an HOA!
- Spring TX First Time Home Buyers Guide - Part 9 - What to bring to your closing!