OfflineNow i know that some(if not all) of these Contingencies have been covered in previous posts(forums), However I think people need to realize that the wording in some of these "FREE" downloadable contracts do NOT protect you to the extent that you would think:
Example: "Purchase Contingent Upon Financing": the problem with this contingency that i see with a lot of the wording in the contracts is, if Financing is available(you were approved) say @ 15% for 30 yrs, well this clause would not do you any good, cause technically you got financed. Now your stuck paying a payment you now can't afford, or you violate the contract and lose ALL your earnest money. Here's a better way to word it.
1) "THE PURCHASE IS CONTINGENT ON THE BUYER OBTAINING FINANCING SUITABLE TO THE BUYER" This would allow you as the buyer to be relieved of the contract, EVEN if some form of financing was available.
2) "OFFER IS CONTINGENT UPON SUITABLE HOME INSPECTION" The contract CAN allow for the buyer to personally conduct this inspection OR may permit the buyer to hire a professional to conduct the home inspection. Allows you leverage in whether or not to honor the contract. Allows the buyer to inspect the property & reciend(cancel) the contract if I find the property to be in "UNSUITABLE CONDITION", "UNSUITABLE CONDITION" is largely @ the discretion of the buyer.
3) "PURCHASE CONTINGENT UPON ABILITY TO RE-ASSIGN": This allows you(the buyer) of a piece of property to RE-ASSIGN the purchase contract to another buyer without penalty(you would NOT need to add this UNLESS you did NOT sign with YOUR NAME/AND OR ASSIGNS),just something to think about, YOUR HERO, SULLY.
YOUR HERO, SULLY
Another excellent post Sully.
Anita
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"FAILURE IS NOT AN OPTION"
Thanks Sully,
I have used the "/OR AS ASSIGNED" but I can easily use all three just about on every offer for greater protection.
Regards,
Rohn
DeJor Properties, LLC
ALL 3 when i put in an offer, that way i KNOW i'm protected, SULLY.
p.s. thanks ant, means a lot when you say that, then i KNOW i'm doing the right thing!
YOUR HERO, SULLY
How do you put offer without a pre-approval, if your planning to assign the deal to someone else.
That seems to add another level of protection for the investor. Good job.
Rina
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Sully,
Thank you very much for sharing the phrases of the 3 Contingencies. Part of being new to all this is making sure you have whats needed in your contract so it contains vital wording to protect the investor. As I read through the posts I have created an electronic file containing folders of the different subject areas I need to reference to. I usually copy the section into a word document & save into the appropriate folder. The phrases will be added so that I can insert them into my Purchase agreement. Thanks & God Bless.
Love, Light & Blessings,
Darlene
Thanks for the post Sully! I've read alot of good posts by you. I was wondering what would happen if I couldn't assign a contract, but this gives me the confidence to lock up a deal, without having to worry about getting into trouble!
Thanks,
Adam
I was wondering if you would recommend building a network or looking for deals first or both? I'm worried I'll find a good deal, but not have to right people to help me, but I'm also eager to get started and don't want to miss out on anything in the mean time!
Thanks,
Adam
Don't worry about being "PRE-APPROVED", you'll only need to worry about that when you plan on putting an offer in on a bank owned property(REO), for pre-foreclosures and FSBO's, and any other "regular" seller, a plain old offer will be just fine.
P.S. A Special Thanks To Everyone That Appreciated This Post, SULLY
YOUR HERO, SULLY
Thank's Sully,
great notes to have at hand.
-B
so im about to make an offer on a HUD owned home and was wondering when i make my offer is that when the contingencies go in or after my offer is accepted and i sign the contract??
sorry this is actually the first written offer im about to do!!!
A few years ago, I was a HUD Authorized Agent. At that time the only way you could bid on a HUD home was through an Authorized Agent. I don't believe HUD would allow contingencies other than what was on the standard bid form. Things may have changed since then. Are you working with an agent? If so, ask them what contingencies would be allowed.
Al
"NOW GO FIND A DEAL"
Watch your thoughts; They become words,
Watch your words; They become actions,
Watch your actions; They become habits,
Watch your habits; They become character,
Watch your character, it becomes your destiny.
Frank Outlaw
Right for the most part, i know if you put a bid in, it MUST be through a HUD approved Agent, they will NOT allow you to put a bid in yourself, they will ONLY allow a realtor's offer, you could try to ADD the contingencies but, HUD will NOT accept a contract with "weasel clauses" they MAY allow a "INSPECTION CONTINGENCY" but, thats a BIG maybe, SULLY
p.s. excuse my ignorance when it comes to an offer on a HUD house, for i dont really follow HUD's often, because they always want way to close to FMV and will barely discount the property(most times) plus, it's an ALL AROUND hassle to deal with, SULLY
YOUR HERO, SULLY
Sully is right, the HUD bidding process, and then submitting the contract, and getting the house closed can be a hassle. HUD has very strict rules and the process must be followed exactly. I only closed three or four of these, and all of them had issues. I believe there is a built-in inspection period of 10 days. HUD homes are first offered to buyers who intend to occupy the property. I believe you must occupy the property for at least a year. If an acceptable bid is not received by HUD, they will then offer to any bidder. This is where an investor has an oportunity to bid. Most houses that get this far are in very poor shape. Check out the HUD website for more detailed information.
Al
"NOW GO FIND A DEAL"
Watch your thoughts; They become words,
Watch your words; They become actions,
Watch your actions; They become habits,
Watch your habits; They become character,
Watch your character, it becomes your destiny.
Frank Outlaw
Thanks guys!!
Yes i am dealing with a HUD agent and the house is actually 3 doors down from my current home. I'm doing a land contract on my current house and putting a bid on this home. The agent said that it is open for bids buy owner occupy only for 1 week then open for bids from anyone after that. The house is in very good shape. Actually it is the same house as the one i am currently in and its in better shape then mine was before i got it and they are asking 20,000 less then what i paid for my house.
The agent said from the deals that he has done HUD always takes 85% of the asking price. So that is my plan. Yes you do have to live there for 1 year if owner occupy but im not worried about that. I plan on doing that anyways!
Thanks again,
Shaun
Let us know what happens.
Al
"NOW GO FIND A DEAL"
Watch your thoughts; They become words,
Watch your words; They become actions,
Watch your actions; They become habits,
Watch your habits; They become character,
Watch your character, it becomes your destiny.
Frank Outlaw
Great post Sully! I would also add another contingent like "THE PURCHASE IS CONTINGENT ON THE APPROVAL ON MY BUSINESS PARTNER" You could use your spouse, friend or an actual business partner. Great job Sully!
Lloyd
Thanks very much Sully! A little change in the wording can make such a big difference in intepretation. I'm incorporating your ideas in all my contracts from now on.
Tony
Tony
Great post!! Just what i was looking for. Now i have more confidence to submit my offers. you guys are the best!!!