Property Manager MA: Protect your deposit
It is a great time in your life when you make an offer on your dream property and the seller accepts. The next step is for you to sign a contract, pay a deposit so that the seller can see you are serious about moving ahead.
The reason why a deposit makes a difference is because it shows the seller that you are a serious buyer. The money is deposited in escrow and can’t be touched by both buyer and seller. Fortunately, there are ways of protecting the deposit.
Get to know the property
You need to ensure that you add a clause in the contract which allows you to inspect the property before you buy it. An inspector will check the home with a fine tooth comb. This could mean everything from the foundation to the roof in the case of older homes.
If there are problems within the property, you can choose to back out of the sale. If the problems are minor and fixable, you can always go ahead. The good thing is that the contingency clause will help you get out of that contract.
Property Manager MA: Get everything in writing
The most important thing for you is to make sure that you get a written notice for a loan approval. Don’t let the property appraise for less than the purchase price. So add that contingency clause which allows the buyer to get a written approval before the sales closes. In the event the loan fails, you can easily exit the sale and get your money back. There can be a risk where the lender won’t give you a written notice for the loan, don’t remove the clause as you will never get your deposit back. Even if the lender does approve the loan, they can pull out at the last minute.
You can always ask the seller for an extension if it is possible. It’s not in anyone’s interest to stop the deal. The problem is that if you sign off that you have an approval and you don’t get a loan, then you can lose your deposit.
Another way of protection is to add an appraisal contingency where the property should not appraise for less than the purchase price. So you should be able to walk away if the appraisal value is less than the selling price.
Sellers have to make sure they disclose regarding their knowledge and experience within the property. They are required by the law to disclose all property defects or anything which would make the property a sore point. This will also give you the opportunity to review state reports, building permit histories and earthquake/flood maps.
This will give you the opportunity to exit the sale if you discover something negative about the property. The caveat is that you have to sign off on those disclosures at some point. After you do that, your deposit is at risk. You are allowed to ask questions and probe further.
We hope you enjoyed our post “Property Manager MA: Protect your deposit”.