Buying Tips: How to Get Out of a Real Estate Contract Fee-Free
Signing on the dotted line when purchasing a piece of real estate can be scary, because usually the contract represents the biggest financial investment of your entire lifetime. But when you first fill in a purchase offer contract – which is usually the first step taken with the help of a Realtor in making a serious offer to a homeowner to buy their home – you can insert special language to help give you a safety valve. Every state has its own unique standard types of real estate contracts, but most of them have two major components – one that spells out how the house will be financed, and another that is usually titled “Special Provisions.” The Special Provisions section is where anything important that was not covered in the rest of the contract can be spelled out. Many real estate professionals will use the Special Provisions paragraph to plug in some conditions to protect themselves in case they decide to “walk” and not go through with the purchase. Because it is a contract, once a purchase offer is properly filled out, agreed to by the buyer and seller, and signed, it is a binding legal document. Back out and you risk losing your earnest money. But what many savvy buyers do is they write in the section that describes financing “buyer intends to use private financing.” Then to make sure they got the point across, they write in the Special Provisions section “this purchase is contingent upon the buyer’s ability to get private financing.” Private financing just means you do not plan to get the money from a traditional bank or mortgage company. Often private financing means you are getting a loan from a parent, for example, or from a friend. Since you didn’t spell out exactly who the private financer is put you did clearly state that the purchase is contingent upon getting private financing – if you later decide you want to back out of the deal you can just tell the seller that the private financing fell through, so you have to opt out of the purchase. As with any legal document, it is always recommended that you consult a qualified attorney before signing. But if you suggest this strategy to your lawyer as a built-in way to give yourself an out, chances are they will agree that it is legitimate and is a pretty clever way to keep your options open.
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- Procedure to Terminate a House Purchase Agreement
- Elements of a Typical Real Estate Offer To Buy
- Escrow Process in Real Estate
- Closing on a New House
- Alternatives To A Traditional Mortgage
