The "As Is" Residential Contract For Sale and Purchase is the most common contract form used by real estate agents in Florida. There are also other versions used by real estate professionals and attorneys. And there are many versions buyers and sellers can download online if they'd like to enter into a sale privately.
Make sure whenever possible to include the perfect LEGAL spelling and full name of each of the sellers and buyers in all needed spots on the contract for sale, most especially the first section of the contract and the signature section. Why? These names will be the ones used for title searches, lien searches, and ultimately go onto title insurance and warranty docs. If there is a mistake or incomplete name, make sure to notify the closing agent or attorney. They will prepare a name affidavit so the names can be corrected and they will make sure the names are correct on all closing documentation. Buyers and sellers, when entering to a contract for sale and again at closing, will need to provide their original driver's licenses and potentially additional photo/legal identification to ensure names, spellings, etc are all correct.
It's very important for the buyer and seller to agree to what is included in the sale, and what is excluded. For instance, all attached appliances are normally automatically included in the sale. But what if there's an extra refrigerator in the garage? The buyer and seller need to agree if that 2nd refrigerator comes with the sale, or if it is going to sold separately or removed before closing. Typically things like extra fridges or freezers, and chandeliers will be written into the "excluded from sale" line, as most sellers want to take those items with them. Usually pool equipment will stay with the home, and all attached fixtures and appliances included lights, appliances, sheds.
The seller sets an asking price. But buyers can offer whatever amount they'd like. The amount the buyer is offering goes on the Contract. The seller has the right to change that amount as a counteroffer, if they don't like it. Until both parties agree to the purchase price, and both parties initial any changes made to this purchase price on the contract, the contract is not valid.
In the even the seller accepts the Contract for Sale, and all parties sign and initial everything needed... the buyer is then obligated to carry out any escrow/deposit terms outlined in the Contract. For instance, a buyer stipulates they will pay 10% into escrow (as a deposit towards the purchase price) within 3 business days of their offer being accepted. The escrow is held with an impartial, third party. This is usually the title/closing company or attorney. There could also be a second and third deposit for escrow. Click here for more Escrow information:
The agreed upon date of when the closing will occur. Though most often a specific day/date is included in the contract, it is advisable to put "on or before" the agreed upon closing date, as that can sometimes move up the closing a few days ahead of time. This is in the event both parties want a faster closing if possible. The title/closing company, and any involved real estate agents will use this day/date to calendar and draft the route of all elements as the sales process moves forward (deposit paid, inspection, appraisal, funding approval, etc etc). This most important date on the contract for sale can be changed as needed, with a separate addendum. Reasons to change closing date include occupancy issues, funding delays, mail-away closings.
This stipulates how the buyer is paying for the property. Are they paying cash? Are they securing a mortgage? FHA, VA? Read this clause closely as there could be stipulations regarding interest rates and approvals that could affect the sale's success - IF the buyer or loan doesn't meet the outlined criteria.
Property inspections are generally done within the first week or so of an executed contract. Both parties should want the inspection report results as soon as possible. Why? If inspection report shows things the buyer doesn't like, this clause can be a way for a buyer to back out of the contract without penalty. The seller will want to know that the buyer has had an inspection done and has accepted the results and is moving forward, as soon as possible, so no unnecessary time is wasted.
It's very important that they buyer is aware IF the seller is foreign, without a social security number. Why? They will have the obligation for the FIRPTA withholding. Typically the title/closing agent will assist with all FIRPTA related documentation and issues. Generally, buyers (closing agent) keep back/withhold 15% of the sales price for the IRS. For more information on FIRPTA click here:
If the buyer is financing a mortgage for the purchase, the bank will order an appraisal be done to verify the purchase price is in line with the property's value. The appraiser will go out to the property and measure, take photos and notes of any improvements or noticeable issues, and will research the neighborhood, recent sales, and factor in all applicable community and local market conditions. Appraisals, like inspections, should be done as soon as possible once a contract is executed. What happens if an appraisal comes back lower than the agreed upon purchase price? Click here for more information on appraisals:
If the property is located within a condo community, and there is an effective contract for sale, there will be additional steps needed by the buyer and seller. The seller needs to provide the buyer with a copy of condo docs. And the buyer needs to review and accept those docs. Also, In most cases, the buyer will need to apply for and be approved by the governing condo association. In addition, if the buyer is financing the purchase, the bank lending the money will need to approve the condo community. Sometimes issues arise when a condo community has mismanaged funds, doesn't have enough money in reserves, didn't pass their 40 year recertification, the developer owns a significant portion of the community still, or the percent of owner occupied is too low compared to number of renters. If the bank doesn't approve the condo, the financing won't be given.