Tim Bell walks through how to use a purchase-contract addendum to change deal terms with a buyer or seller. He shows when to use a state-approved form versus a generic one, where to fill in details, and gives a real example: lowering the price from 150,000 to 140,000 with an inspection contingency as backup if the other side won't budge.
Now the next item on our list here of forms that we're going to need or may need for our real estate investment business is something called an addendum. Now this addendum allows us to make changes to our original contract with the seller or with the buyer. We can use this, this addendum to change provisions if need be with the seller or with the buyer with when we're using our simple contracts, our simple one page contracts. Now again, if your agent is writing the offer for you or it's a bank owner short sale property, you'll need to use the standard addendum form that comes with that standard state approved contract. Every standard state approved contract also has available or every agent has available to them an addendum to make changes. Okay. If you're using your contracts and not the state approved contracts, you, you may need an addendum to change the terms. For example, after your inspection you may need to renegotiate the price with the seller. You never know what kind of changes you need to make. This addendum to the real estate purchase contract allows you to make those changes. Okay. Again, this is a generic addendum that you can use with anything. There's a place where you can put in the particulars about it, the, the property address, the buyer's name, the seller's name, different things like that. And then as we scroll down we can see the following items are hereby incorporated as part of this agreement. Those are the blank spaces in which you would write special provisions. For example, let's say you originally agreed to pay 150,000 for the property. You decided you couldn't pay 150,000 because your wholesale buyers are not willing to pay 160 or 170. Okay, so what could you do? You go back to the seller and renegotiate. You can say, Mr. Seller, when I originally agreed to buy the property for 150, I thought I would be able to work it out, but it's not working out there. So I'm going to need to lower the price. If we can lower the price down to 140, then I'll carry on with the transaction. Otherwise I'm going to have to use my inspection contingency to get out. Okay, this would be the form that you would use to change that price. You could write in here under where it says the following terms are hereby incorporated as part of the agreement. You could write in there something like all parties agree that the sales price referenced in the original agreement shall now be 140,000, not 150,000 or something like that, just so it sounds official and just so that it's clear what the circumstances are between the parties. Okay. Now you can see that it says that the buyer and seller agreed the contract deadlines referenced in the agreement either change or change as follows. If you change the deadlines, then of course that's going to change. If not, you leave them the same. Then it says to the extent the terms of this addendum modify or conflict with any provisions of the agreement, including all prior addendum counteroffers, these terms shall control. In other words, anything that this addendum changes changes. Everything else remains the same. As it says, all of the terms of the agreement, including all prior addenda and counteroffers not modified by this addendum shall remain the same. And then there's a place for the buyer signatures and the seller signatures. So that's the addendum that you might use if indeed you have to make some changes.
