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The Contract of Sale otherwise known as the Real Estate Buy/Sell Agreement is a legal document which binds the buyer to a set purchase price and binds the seller to convey the title. The contract also services as the initial directions to the Title Company or closing attorney to begin processing the transaction. When your sales associate prepares your Real Estate Buy/Sell Agreement, make sure you are perfectly clear about the following details:
Who is paying the various expenses of the sale, including closing costs?
Sellers customarily pay forthe real estate commission, Wood Destroying Insect Report, and their portion of the year's taxes and assessments. Buyers customarily pay for their portion ofthe year's taxes and assessments and their loan fees. Occasionally sellers and buyers decide to share the expenses of buying and selling. This must be negotiated during the purchase offer time and often depends on local real estate market conditions, other terms of the purchase contract, the seller's cash and timing considerations.
Seller concessions, as they are known in real estate jargon, for at least part of the closing costs, are more common in a buyer's market than in a seller's market. These concessions typically occur during the offer- counter offer-acceptance cycle. On rare occasion a seller will make further concessions during the closing time period. Any concession after the purchase contract is mutually agreed upon must be inwriting and agreed to by all parties.
Some lenders will allow a credit from the seller to the buyer for the buyer's nonrecurring closing costs. But they usually won't allow a credit that reducesthe amount of the buyer's down payment, or that includes any of the buyer'srecurring closing costs, which include such expenses as fire insurance premiums, interest on the buyer's new loan, property mortgage insurance and property taxes. Lenders' policies vary on how large a credit for non-recurring costs they'll allow.
What is the actual closing date?
The closing date is the date in which the net proceeds are available to the seller and the title has been recorded. It is set in the original purchase agreement by agreemen tbetween the buyer and seller. It is always nice to set a closing date that leaves you enough time to prepare to move in, and which doesn't cost you unnecessary money. The date of closing can affect your closing costs (make sure to ask your lender for a good faith estimate).
What is the date of occupancy?
Many times the seller will request to remain in the property after closing, in part to assure that closing actually occurs without the seller having moved from the property. If that is the case, the seller actually becomes the tenant of the buyer after closing, so proper documentation is needed.