Winning Contracts and Clauses

When making an offer on a property there are many different contracts and documents you can use. Personally, when buying a property, I like to use the realtors form for the particular state I am buying in. Now if you are buying a property through a realtor, they will automatically use their form. If you are buying from a “for sale by owner”, it is my understanding that you can still use the form but you will want to take the realtor logo off of the document because there is no realtor involved. There are two reasons you want to use the same form as the realtors. The first one is in the event you ever have a seller tell you they want to have their attorney look at the contract before accepting it. If you are using the realtor type form then the only thing the attorney can basically say is “this is the same form that every realtor in the state uses”. After all, they don’t know the value of your property, do they? And if you use my three clauses below they will not have a problem with any of your terms. The second reason is if you were ever sued then the first thing that the judge will ask is “who drafted this document” and if it was you and it is a one sided document then it will not make you look good in the eyes of the court.

To find the contract that your states realtors use, you can simply get online and go to Google and type in your state and then the words “realtor contract” or “real estate contract”. Ex: North Carolina Real Estate Contract. You can also do an advanced search on Google by selecting only PDF files in your search. This way you will only get search results that are PDF files. This will help you find what you are looking for much faster. You will want to check with your local attorney to make sure you can do this. I ask this everywhere I go and speak and no one has told me different but you will want to just check with your attorney. I am not a big fan of creating a one sided contract. After all it is best to keep it simple and only put in enough clauses to protect you but not too many that will scare away your seller or realtor. I will show you the three best ones in the clauses section.

Having said all of the above, if you would still like to use your own contract, I have included one for you. It is a simple, easy to use, one page contract that you should not have any trouble with using. I have included it on the forms disc, as well as below. Right after that I have included a more extensive contract that covers about everything you can think of. You can use either one. I would personally suggest using the simple one page form for buying and the more detailed one for selling.

Now everything above applies to consumer transactions. A consumer transaction is basically a transaction where you are either buying from someone who lives in a property or selling to someone who will be living in the property. Everything else is considered a commercial transaction meaning that you are either buying from a bank or an investor and/or selling to another investor. In this case you will want to use your own form and make sure your buyer who is the investor does their own due diligence. Or at least you tell them to.

Three “Must Have” Clauses

When we buy property there are basically three different clauses that we put in our contract. Regardless of the type of financing you will be using, if you have that lined up in advance you shouldn’t even need a financing contingency in your contract.

The first clause is usually already in the contract and it is: This contract is subject to a 15-day inspection and approval of the condition of the property prior to closing. Now, some sellers depending on who it is, maybe it is a bank or an REO lender, may not allow you 15 days. That is okay as long as you can get out there and get the property inspected prior to having to close on the property. But, we always try to shoot for 15 days. So that is the first clause that we want to make sure that is in our contract.

The second stipulation or clause in the contract that we always put in ours is: This contract is subject to an acceptable appraisal. This lets the seller know that we are not paying what is the value of the property but we want an acceptable appraisal. We have even had some of them say, well what is acceptable. Well, you can just keep that simple and let them know that I will let you know when the appraisal comes in whether or not it is acceptable. We do not usually get any resistance with this.

The third clause that we put in all of our contracts is: The deposit shall be the sole remedy in the event of buyers default. Outside of these three clauses, I cannot think of anything else that you need on every contract. If you have already got in touch with a lender and lined your financing up in advance or have partners, private money or hard money rehab loans then you do not even need to put anything in there about financing. In fact, you will get a lot more of your offers accepted, approved and closed if you do not put any sort of financing contingency in your offer. And, with these other three, you do not have to worry about it anyway. You have your out in the event that you need one.

I hope you have enjoyed this article taken from my course called the Ultimate Buying and Selling Machine! which teaches how we buy and sell 5-10 properties a month, have them sold in less than 2 hours and never leave the office or look at them. For many more articles and a 10 part ecourse on how to create your own Ultimate Buying and Selling Machine! as well as over 50 training audio recordings you can listen to online, download and collect, simply go to www.LarryGoinsFreeOffer.com where you will gain instant access to all of this and 51 Exclusive Editable real estate investing Forms and Documents all FREE! You will also get two FREE real estate investing eBooks, A free Personal Coaching Profile to help you jump start your real estate Investing, FREE Nationwide Wholesale Property Listing Notification, FREE Weekly Training Teleconferences with Different Topic Each Week, FREE subscription to Larry Goins “Almost” Weekly Investing Newsletter, FREE Admission for Two to Investor Palooza 3 Day Training Event, FREE Admission for Two to Larry Goins 3 Day Boot Camp, Plus over 31 Exclusive Articles on real estate Investing and Much More! Just go to www.LarryGoinsFreeOffer.com. Thanks and I look forward to working with you, Larry Goins