attended to and disclosed the condition of the property and properly priced the property for the current market so that it will adequately appraise. Once under contract with the “Due Diligence” contract form, there is no independent loan condition or contingency in the contract, as this is entirely managed under the Due Diligence provisions of the contract. Regardless of mortgage pre-approval, once under contract, Buyers should immediately do all that is necessary to fully apply and qualify for their loan and quickly obtain the property appraisal. With the prospect of paying a very high Due Diligence Fee and no loan condition, confidence about obtaining a needed mortgage should be high before going under contract. But in any event, you should be satisfied that you will be able to obtain the mortgage loan you need at closing before the end of the Due Diligence Period. In a “Balanced Market”, Better Buyers can more easily avoid the requirement of a substantial Due Diligence Fee and often can be satisfied with a shorter Due Diligence Period that will appeal to sellers. b) Better Buyers can demonstrate they have the necessary cash to complete the purchase. Whether a mortgage loan is required or not, demonstrating that the buyer has the necessary cash for the balance of the purchase price and closing costs can be a very important factor to a seller. Such proof as account records or letters from buyer’s bank, trust officer or attorney can be very effective in establishing the buyer’s ability to complete the transaction. c) Better Buyers are usually ready go to Settlement soon, even when they must sell in order to buy. If a buyer must sell property in order to purchase, it is far preferable that Buyer’s Property is under contract of sale when negotiating with a seller. There is no contingent sale addendum or condition typically available or used, as the Due Diligence Period can serve to allow a buyer time to determine whether they can get a property they must sell under a reliable contract of sale. An extension of the Due Diligence Period might be negotiated before it expires to provide additional time, but sellers are not obligated to agree to any extension. 6. Although the contract form allows for the inclusion of identified "personal property" to be transferred at no value, a requirement that the seller convey any personal property which does not typically convey with a home will probably create issues for any mortgage lender. Such items as refrigerators, clothes washers and dryers, window air conditioners and similar appliances are usually not a problem for the lender. If other personal property is desired, particularly lawn and garden equipment, furniture or flat screen televisions, those items should be the subject of an entirely separate contract and payment of reasonable consideration should be made in order to avoid issues with the mortgage lender. Real estate agents cannot write such contracts. Special attention should be paid to fuel tanks and their contents as the form suggests. 7. Buyers may request and negotiate any modification by seller of the terms of the contract or of the condition of the Property during the Due Diligence Period. However, in a “Seller’s Market”, it is much less likely you will be successful. a) If` buyer or any lender requires an appraisal of the Property, this should be completed and acted upon during the Due Diligence Period. As with the mortgage loan, there is no independent appraisal condition or contingency in the contract and this, too, is entirely managed under the Due Diligence provisions. Inadequate appraisal may be a reason to modify or terminate the contract of sale. However, if the buyer is obtaining an FHA or VA loan, the FHA/VA Financing Addendum must be included in the contract at the outset and provides an independent appraisal condition until Closing, protecting the Earnest Money Deposit, but NOT the Due Diligence Fee. b) Issues relating to the condition of the property may be addressed during the Due Diligence Period. Buyer should obtain an independent inspection by a licensed home inspector, as well as any further inspections that may be recommended. However, it is unrealistic to expect any house to be in "perfect" condition, particularly in a resale transaction. And buyers must be clear that the contract calls for the Property to be conveyed in its current condition (“as is”).
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