Today’s Complex Real Estate World
Buying and selling homes is more complex than it appears on the surface. While it may seem like REALTORS simply open doors and fill in contract forms, there is a significant amount of advice, strategy, research, and negotiation involved in each step of the process.
Having an agent or team with significant experience handling many successful transactions over the years helps provide incredible insight into each step along the way. And it protects your best interests in one of the largest financial and emotional transactions of your lifetime.
Contracts in the 1980s were only two pages long in Georgia! Today they are 20-40 pages long, and far more complex than ever before. In addition to the Purchase & Sale Agreement, there are numerous disclosures, stipulations, and exhibits used to customize the contract terms to best represent a client.
Offers and Contracts
When the real estate journey gets to the critical step of making an offer, negotiating to get a binding contract, then negotiating a second round during due diligence, and finally, making sure everything is in order for closing, it helps to have a strong guide with proven strategies on your side.
Most REALTORS use the Georgia Association of Realtors (GAR) licensed contract forms. These forms provide numerous possible optional special stipulations, exhibits, and disclosures to protect clients.
Several times a year, GAR modifies the forms to provide better clarity of terms, to meet ever-changing laws in Georgia, or to align with court cases that might impact contracts.
Here are some typical components of a residential contract in Georgia:
- Purchase & Sale Agreement which includes the Due Diligence period for inspections
- Seller’s Property Disclosure Statement
- Community Association Fees, Disclosures, and Related Issues Disclosure
- Conventional, FHA, VA or USDA Loan and Appraisal Contingency
- Sale or Lease of Buyer’s Property Contingency
- Lead-Based Paint Disclosure
- Legal Description
In addition to these more common forms, there are hundreds of additional forms, disclosures, contingencies, and special stipulations used to customize each client’s situation.
Common Confusion about Deadlines
Due Diligence is a negotiated number of days in the contract during which time the buyer may perform inspections and re-negotiate the price, closing costs or repairs to be completed by the seller. During due diligence, the contract is considered an “option contract” because the buyer has the right to unilaterally terminate the contract and get a full refund of their earnest money for any reason.
Due diligence negotiations must be completed and signed in an amendment prior to midnight on the last day of due diligence to be binding on both parties. Otherwise, if no amendment is signed and the contract is not terminated by the buyer prior to the deadline at midnight, the buyer has waived their right to negotiate further concessions or repairs.
Often buyers think the loan must be fully completed prior to the end of their finance contingency, but it is not that simple. The financing deadline is the last day the buyer has to get a loan denial from the lender named in the financing contingency exhibit, or they risk losing their earnest money. It is ok to get loan approval after the deadline.
If the buyer obtains an appraisal below the purchase price prior to the end of this deadline, they can submit the appraisal along with an amendment to adjust the sales price to the seller. If the seller refuses to accept the price reduction to match the appraised value, the buyer can get a full refund of their earnest money if they opt to terminate the contract.
The buyer may also pay the difference between the appraised value and purchase price at closing. Often for unique properties, appraisals may come in low because it is harder to find similar comparable sales, so a buyer may opt to pay more than the appraisal if they are comfortable with the value of the property.
Selecting a Guide for Your Real Estate Journey
The Path & Post Real Estate team offers a no-obligation, no-pressure consultation with potential clients to see if we are a good fit. Contact the team at Path & Post today for a personal consultation with one of our expert, friendly real estate strategists.