Inspection Clause
You need to have the right to make the contract contingent upon your right to do a thorough inspection before a certain date. Make sure you are not required to hire a professional inspector and that the inspection clause permits you to cancel the contract if there are things wrong with the property if the seller is not willing to fix or reduce the price.
Choice of Escrow Company
As the buyer, insist on the right to choose the title or escrow company so that you remain in control. A conservative or uncooperative escrow or title company can make life very difficult if you are trying to do a creative deal.
Right to Extend
Most contracts call for a date certain for closing, using the words, “on or before”. If the buyer is not ready to close by these dates, the seller can hold him in default. If you want to buy more time, make the closing date “on or about”.
Limited Inspection Clause
Most standard broker contract give the buyer the right to make the contract contingent upon your right to do a thorough inspection before a certain date. Make certain that the inspection period is short and that the inspection must be done by a licensed (if they are in your state) professional inspector. Limit objectionable items to roof, plumbing, electrical heating and structural defects. An open-ended inspection clause will permit the buyer to "weasel" out of a contract because the garage door squeaks.
Choice of Escrow Company
As the seller, insist on the right to choose the title or escrow company so that I remain in control. A conservative or uncooperative escrow or title company can make life very difficult if you are trying to do a creative deal.
Qualification of Buyer
The most important thing to keep in mind when selling is that time is money! The single biggest mistake sellers make is allowing an unqualified buyer to tie up their property under contract for two months. Do not believe any claims of the buyer, his agent or mortgage broker about their ability to qualify for a loan. You should know exactly what the qualifications are for an FHA or FNMA loan in your area and qualify the buyer yourself.
I use the following clause: "Within 48 hours, buyer shall provide seller with buyer’s complete financial and credit information for seller’s approval. Within 72 hours after receipt of such information, Seller may terminate this contract and refund buyer’s earnest money if, in seller’s sole opinion, buyer does not have the creditworthiness to qualify for a loan from a third party. Seller’s decision and opinion shall be final in this regard, and buyer shall have no further recourse after return of this earnest money deposit."
Permission to Contact the Lender
I always want the have the ability to control the entire loan process and be able to get information from the lender along the way. The buyer’s lender won’t talk to you directly, without express written permission of the buyer.
“or/and assigns” or “or/and Nominees”
As the buyer, you want to have the right to assign your contract. By placing your name with the words, or/and assigns,” you automatically give yourself that right. Please put them in this order because if you put and first an attorney could easily expect you and the other party to be present. Also make sure that there is no other clause in the contract referring to the assignment of the contract. If there is you will need to make another clause that the seller acknowledges that you may assign this contract without written consent from them.
To remedy this problem, insert the following clause: "Buyer hereby gives express permission to all parties, including lenders, employers, financial institutions, credit agencies, mortgage brokers and real estate agents to release any appropriate financial information to the seller."
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