OfflineHi guys!
I am drafting up an Agreement to Purchase (Dean's form found here at this site) and want to add an inspection contingency language to it. I will assign the agreement to an investor.
It is a FSBO deal.
But I am not sure exactly what to say there.
I've come up with the sentence below, which I am putting under the Inspection section:
"This Agreement becomes null and void in case Buyer’s partner does not approve of the result of the inspection or in case the inspection itself does not take place."
I thought that if I cannot find any end buyer within the 30-day inspection period, I would not be doing any inspection. In that case, I cannot really say "well, this agreement is void because my partner does not approve of the result of the inspection" when there has been no inspection to speak of.
So, I put "in case the inspection itself does not take place".
What do you guys think....?
Matt Inomata
This is an exit clause you can use in your addendum (contingency) along w/your purchase contract. Sounds redundant to me.
I would reword/simplify to make your point.
You may want to say "contingent upon 10-day, or 14-day, or 30-day (whatever you feel right with) inspection period and subject to business partner's approval." Or simply 'subject to inspection period of X amount of days.'
How much time will you need to market to your buyers? Give your end buyer time to do a thorough inspection (at least a walk-thru-look/see) prior to close. This will determine your closing date. Don't forget about having 'access to the property' during your inspection period. Everything is in the contract!
It must be very specific and worded properly (contract jargon).
Dean has printable contracts (Forms&Docs), etc. to use or you can use Your State's Realtor forms, w/a contingencies page. You'll also find exact contract wording all over this site! Look under CONTRACT Forum. Plenty of blog threads, too.
PS. Don't reinvent a purchase agreement contract. Use what works.
(No time to play lawyer, LOL).
Note: Serious (savvy) Investor buyers WILL perform an inspection. They want to know what they're getting into, where their rehab costs will lie, and whether it's a good deal or not. They'll have investor-friendly inspectors available/on their team. It's foolish to not inspect a property. Conventional lenders actually require it (so do HMLs). ...Some wholesalers even do the inspections for their buyers. Up to you.
Happy Prospering! ~Kat, Liberty Residential Investment Acquisitions
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The standard clause I use in my offers is "purchaser's obligation to close under this contract is subject to a property inspection contingency. Inspection must be made within _____ calendar days after Seller's acceptance of the contract. If results of the inspection are unsatisfactory to purchaser, purchaser must notify seller within __calendar days after the receipt of inspection report of purchaser's decision to terminate contract".
Note if you say 21 days for inspection, and another 5 days after receipt of report (report itself can take 5 days to even create), that would give you a total of 31 (21 + 5 +5) days to find a buyer or terminate.
I personally think it makes it a weaker offer to say you may not perform an inspection. If someone was buying my house and said they're not going to inspect it, it sets up a red flag, at least for me.
Let us know how it goes!
- Tom
Thank you so much for the information! That really helps tremendously.
This wholesaling stuff is just new to me, and I was just so used to having all of my PAs prepared by my agent. Indiana State form did not make me nervous a bit, but now that I am not using any State form, and am drafting the PA on my own, I AM nervous!
Thanks again, Liberty Kat!
Matt Inomata
Bothell, WA
I would reword/simplify to make your point.
You may want to say "contingent upon 10-day, or 14-day, or 30-day (whatever you feel right with) inspection period and subject to business partner's approval." Or simply 'subject to inspection period of X amount of days.'
How much time will you need to market to your buyers? Give your end buyer time to do a thorough inspection (at least a walk-thru-look/see) prior to close. This will determine your closing date. Don't forget about having 'access to the property' during your inspection period. Everything is in the contract!
It must be very specific and worded properly (contract jargon).
Dean has printable contracts (Forms&Docs), etc. to use or you can use Your State's Realtor forms, w/a contingencies page. You'll also find exact contract wording all over this site! Look under CONTRACT Forum. Plenty of blog threads, too.
PS. Don't reinvent a purchase agreement contract. Use what works.
(No time to play lawyer, LOL).
Note: Serious (savvy) Investor buyers WILL perform an inspection. They want to know what they're getting into, where their rehab costs will lie, and whether it's a good deal or not. They'll have investor-friendly inspectors available/on their team. It's foolish to not inspect a property. Conventional lenders actually require it (so do HMLs). ...Some wholesalers even do the inspections for their buyers. Up to you.
There is really only 1 contingency you need to have in there to allow you the ability to exit without issue. This is the inspection contingency I advise my students to use.
“Offer subject to satisfactory inspection by buyer and/or buyers partners within 14 days of acceptance.”
However, any of the ideas mentioned above are great!
Why don't you use the state form and x out the part that applies to realtors and commisions. Change the inspection period in your state contract to something more favorable to you.
I'am looking at a home that"s with a Realtor but the home it needs lots of Rehab the home has been on the market for over 40 days I want this home I no that i can make a big profit on it over $30,000 but the problem i have is, ya i forgot that it's a estate home the people just want to get it sold and the Realtor is willing to work we me.Is it possible to make a contract that states that i would take the home off the owners and the Realtor's hand under the condition that after 60 days if the home is not sold and fix by me at that time the home goes back to the seller. But also i would like to no if he can transfer the deed of the home to me for that meany days if i don't sell the home PLEASE HELP and What Contract do I use.Why I ask is because i would like to get the home just for that meany days to Rehab it and sell. there Realtor will make double the money this way and i will get mine and the seller will get there's. I just want to get the loan to rehab the home this way. will it work Waiting for a Reply from any one. and how to make this Contract. Thank You. P.S: Need to Explain this to the Realtor but i don't no how maybe if i show him how the Contract works or how it looks on paper that is what he wants to see.
Take your question and post it as its own thread. Too many newbies are "piggybacking" their own problems and questions on other peoples' threads, and they either get ignored for doing so, or the original poster loses because now every comment afterwards will be about your question, not theirs.
I know this doesn't answer your question but, it'll make things far easier for everyone if you do that first. Best of luck to you...
Paul: "I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when my fear is gone I will turn and face fear's path, and only I will remain."
Duke Leto: "I'll miss the sea, but a person needs new experiences. They jar something deep inside, allowing him to grow. Without change something sleeps inside us, and seldom awakens. The sleeper must awaken." - "Dune."
ICEWork32 - not 100% sure what you what to do here, so let me try to clarify:
- If you're simply looking to purchase the house, fix it up and resell for that $30k potential profit, use a Purchase and Sale (P&S) contract.
- If you're looking to assign the deal, use a P&S contract and state it's assignable. Maybe they'll allow you 60 days to market the property once you've got it locked up under contract; it can't hurt to ask if they're currently not getting any offers.
Good luck and let us know!
- Tom