Your very first item of business should be to obtain a quality seller-oriented purchase contract. To do this, you will need to give some thought to what your terms of sale will be. You should decide upon a purchase price (both an asking price and your “bottom-line”), an ideal closing date and what types of contract contingencies you are willing to accept. You should also determine what your earnest money requirements will be and what title company you intend to use. A typical and appropriate earnest money requirement would be from two to five percent of your asking price.

In addition to the actual contract terms, you should also attempt to put together a written disclosure sheet regarding the condition of the property that can be provided to prospective buyers along with the contract. Any defect of which you have knowledge should be disclosed on this sheet. A good rule of thumb is to err on the side of disclosure. It is better to disclose a defect than to be forced to deal with a later claim by a buyer that you failed to disclose something you “should” have. A great deal of care will need to be used in putting together the disclosure sheet. You should avoid the temptation to give this activity less than your full attention.

We would welcome the opportunity to construct a contract and form of disclosure sheet that will fit the specific needs of your particular transaction.

Contingencies may be important to some buyers. In contrast, sellers will seek to avoid contingencies. As a practical matter, however, most buyers will want at least one contingency, the most common being financing. The following are some guidelines for various contingencies that may arise:
• Financing – This contingency should provide for the buyer to formally apply for financing within a short time (3 to 5 days) of full contract execution and to diligently pursue his application. The contingency should specify in general terms the interest rate and type of loan the buyer is seeking. A typical description might be: “a firm commitment for a new purchase money mortgage from an institutional lender, in the principal amount of at least $_____ at the market rate of interest and points.” A drop-dead date for the buyer’s financing to be approved should also be included.
• Pre-Qualification – If the buyer has a buyer’s broker, it is advantageous for both buyer and seller to enlist the broker’s assistance in having the buyer pre-qualify for a loan and eliminate the need for a financing contingency.
• Other House Sale Contingency/Delayed Closing – Some buyers may want to condition their purchase on the sale of their existing home or delay closing for several months. Sellers view these provisions as undesirable for obvious reasons and usually seek to avoid them. Their effect can be mitigated to some extent if, in exchange for granting the contingency, the seller is allowed to retain the right to continue marketing the property. If another offer is received, the buyer would be entitled to a short period to decide whether to proceed with the purchase or be forced to release the home for sale to the other purchaser.

When considering or implementing contingencies in a contract, we strongly recommend that you have an attorney review the contract to make certain the provisions will accomplish the intended result.