Real Estate Contracts in Colorado

 

When you find a property you like, your first thought is to get a contract on it before someone else does. However, you should always think carefully before you put your John Hancock on that piece of paper – changing your mind could cost you thousands of dollars – your good faith money. Purchase contracts are meant to protect the seller more than the buyer; however, you can adjust the contract to benefit and protect yourself.

 

Some contingencies are built into the contract, such as financing and appraisals. If the buyer cannot procure financing within the allotted time frame, he or she has the right to cancel the contract and the seller must forward the good faith deposit back to the buyer. If the property does not appraise at an amount acceptable to the lender, the buyer may also reclaim his or her earnest money.

 

Both the buyer and the seller can opt to add other contingencies to the contract. While both parties usually accept reasonable contingencies, either party can decline to sign the contract or negotiate if they do not agree to one or more of them. Radon is another contingency that is usually in the contract.

 

If a home inspection contingency is not in the contract, you should add it. The contingency should allow for backing out of the contract and for negotiating specific items. If the buyer and seller cannot agree on the replacement or repair of items on the inspection report, you have the right to back out of the contract.

 

If you have a separate contingency for the roof and foundation, make sure you get these items inspected by a qualified inspector, which may or may not be the general home inspector. Roof and foundation leaks can be expensive to repair, and depending on how long they leaked; it could lead to other problems such as rotting wood, mold, and mildew. Issues with the foundation could also be structural.

 

If a mold and mildew contingency is not in the contract, be sure to add one in. Mold remediation is expensive and mold in a house could cause health problems. If you don’t see or smell an issue, you may still want to hire an inspector who can identify less obvious signs especially if the basement or crawlspace is damp.

 

In some cases, a buyer may want to add a contract contingency to the purchase contract. If a buyer needs the funds from his or her current home to buy the house under contract, he or she can add a contingency clause stating that the contract is only valid if he is able to close on his current home. While many sellers won’t sign a contract with such an addition, others will if they are not in a hurry to close.

 

Before buying or selling a home, contact a real estate agent to help you through the process – right through closing.