Tim Bell Contracts 2

So, so let's go through this. Okay, you can see at the top here, it says offer to purchase real estate in the forms that I sent you. It's amongst those forms. You can find it in there. There is a filled out version and there's a blank version. I'm going to go over the filled out version. Certainly you can use the, the blank version if you wish to submit offers on properties. That's what it's for. Okay. But I'm going to go over the filled out version so you kind of have a sense of what you might want to put in there. Vietnam, the undersigned. Good example, properties, llc. Okay, if you have an llc, fine. If not, just put your name in there. That's fine. The buyer offers to purchase from Sam T. Sellers. That's the seller, of course, real estate known as 12345 Ocean Boulevard or Ocean Boulevard. And then the city, Long Beach, Los Angeles County, State of California. So you put the address and all that information there and then it says said property more particularly described as to be determined by the title agent. Now, normally that would be a place in a contract where we might put something called a legal description on the property. Okay, I recommend you do not mess with legal descriptions. I recommend that you defer your legal description information to your title company or title attorney, the title agent. Why? Because legal descriptions can be tricky. Okay, There can be, there's some forms of describing a property other than the address. Legal descriptions where if you put a comma, a period, a colon, or a semicolon in the wrong place, it could mean a completely different property. Don't take that risk. Make your title agent do it for you. They provide title insurance anyway. If they make a mistake, then they will pay. Okay, now the next part here says the purchase price offered is $400,000. Again, I'm just picking these numbers at random here. Okay, $400,000. Then the next line says earnest money deposit paid here or herewith paid $100. Now, let's talk briefly about earnest money deposits. Okay? If there is a real estate agent involved in your transaction, you will rarely, if ever be able to get away with a $100 earnest money deposit. The $100 earnest money deposit idea only applies to properties where it's just you and the seller sitting across from each other at the kitchen table. Why? Because real estate agents are all taught and conditioned to ask for a certain amount of earnest money that is considered traditional or customary in our market. Okay. Hour one, day one of their employment at a brokerage or their first day in the real estate business Real estate sales business Real estate agents are taught what is customary or traditional in our marketplace regarding earnest money deposits. First of all, the earnest money deposit. In case you're unfamiliar with that term, the earnest money deposit is money that you place in earnest to show that you're in earnest or you're serious about purchasing the property. Here's an example. You're down at the car dealership. It's a busy Saturday afternoon, and you're looking for a car. You're looking at several different cars. You don't know which one you want to buy. You drive the red one. You drive the blue one. You drive the green one. Finally, you decide you want to buy the silver one. Now, it's a busy day on the car lot. It's likely someone's going to come and buy the silver one. So what you do is you pull out a couple hundred dollars bills out of your wallet and you give it to the salesperson and say, hold the silver one for me until I get back. I'm going to go down to my bank and get the money, and then I'll come back and I'll pay you for the car. And that $200 deposit that you give them holds the car for you so that they don't turn around and sell it to someone else while you're down getting your money. Okay? That's a car equivalent of an earnest money deposit. An earnest money deposit for a house is very similar to that in that it's designed to show that you're in earnest or serious about purchasing that property and to help reserve the exclusive right to buy that property for you. That's what earnest money deposit is. Okay, now again, back to our discussion of dollar amounts. Okay. Every market is different. Every market has different concepts or different ideas or customs or traditions about what is an appropriate earnest money. Our marketplace, it may be something like $500, or it could be $1,000, it could be $2,000. It could be three or $5,000, depending on the market. Typically, the more expensive the market is, the more is expected in earnest money deposit, sometimes it's not figured or calculated as a dollar amount. Sometimes agents will tell you, well, it's 1% of your offer price or 3% of your offer price, or 5% of your offer price. Even had an agent tell me that in our market it's 10% of the offer price. Okay, whatever. Okay? The point is, though, that you're rarely, if ever going to be able to get away with $100 earnest money deposit when there's a real estate agent involved in your transaction. Okay. However, remember, the only time we're using this particular agreement is when there is no real estate agent involved in our transaction. So we can get away typically with the $100 earnest money deposit. Now, you may need a little bit more, you might be able to get away with less, but this is just a reasonable figure that we often use. Okay, now notice the next line says balance at closing 399,900. That's 400,000 minus your 100. You've already paid for your earnest money deposit and then the total purchase price is reiterated at 400,000. It's very customary in a contract to reiterate that purchase price. Okay. Alright, so let's go on to the next part. This offer is conditional upon the following terms. Number one, said property to be sold free and clear of all encumbrances by good and marketable title with full possession to said property available to buyer at the date of closing. Okay, so basically what that's saying is that there's not going to be any junk on the title, there's not going to be any liens, there's not going to be any encumbrances, there are not going to be any weird stuff on the title like old loans and things like that that you really don't want to be responsible for. Again, if you think about it, it's only fair that they provide good and marketable title for you. Now, if you want to know more about what constitutes good and marketable title and all that, get together with your title person or your title attorney, ask them to go over it and talk with some of the encumbrances, some of the liens, some of the various different things that might be on that particular property.