First-Time Buyers: NEVER Agree to these 5 Contract Terms!

uh Patriot Nation Unite. There's five things, five things we're going to cover today that you cannot agree to in a contract and related documents. In other words, you've been doing your homework. Maybe you've attended my webinar for first-time home buyers and you're preapproved now and you're shopping for homes and you come across the house that you really want to try to make an offer on. But guess what? There's five things that if you agree to are all going to cause you problems, are going to cause you heartaches. Maybe you lose your earnest money. maybe you lose uh the deal altogether. So, we're going to go over the five things that you just absolutely cannot have agreed to in your supporting and purchase uh offer documents when you're trying to buy a home. So, if that's of interest to you, share it with your family and friends because this can be a good one. And let's kick off this rodeo right now. Hi folks, I'm Kevin the mortgage patriot on your side, nestled here in the Hill Country above San Antonio, Texas, serving all you proud Texans and all you great folks all around the country. Another great one. Why is that? Because once you get under contract or you're submitting an offer, you've got to have a savvy agent and loan officer, both of which I am. I'm a dual licensed as an agent and a loan officer to help you negotiate terms because there's going to be five things that I mentioned, five things that you cannot allow yourself to agree to. absolutely non-negotiable because they could only get you in trouble. They could only risk your your uh earnest money and potentially blow the deal. So, we're going to explore all that. If you would hit the like and subscribe, that really helps me uh with my YouTube algorithms, as you know, uh bring up the content to the forefront, allowing you to access my videos better and allowing me to have a broader audience. So, I'd really appreciate that. Let's get into that content right now. Number one of things you should never allow yourself to sign in a purchase contract is a nonstandardized contract. You can sign them, you can engage in them, but you have to have them reviewed by an attorney, a real estate attorney. What am I talking about here? So, for example, in the state of Texas, the governing body is called TRIC, Texas Real Estate Commission, and they have a their own one to four family purchase contract. It's standardized. you have to use this contract whenever you're buying or selling a home unless unless you're an attorney. You can draft your own documents or you're a builder, in which case you use a new build contract. So, with the TRE contract, because and you can see parts of it here. There's it's a nine-page form. I've got a couple of the pages here. Very standardized. All the agents like myself, we know every clause, every nuance of this contract. Don't necessarily need to be reviewed by an attorney. But if you if you're buying say a for sale by owner and the owner happens to be an attorney and they draft their own documents, absolutely absolutely do not sign that unless you have your own real estate attorney reviewing that and telling you what's going on because they can hide anything in these contracts just like a new build uh builder can. I would not sign a builder contract unless I have an attorney on your side going walking you through all the nuances of it. And this is not u you know something small because you know you're paying hundreds of thousands of dollars for a home. You can afford $200 or $300 for an attorney to review it uh with you and go over all the important clauses. So never sign a non-standardized contract without review of an attorney on your side. Okay. Number two, never, and I mean never wave your right to a option or an inspection period. What is that? Well, in the state of Texas, for example, in the contract right here, you can see there's an option period, and it's it's just like it sounds. You have the option, you fill out the number of days for that option period. It's usually 7 to 10 days, and you have the option during that time to do your inspection very quickly, and you can get you can manage it within that time, get the report back and review it. And in fact, I did a I did a video last a couple weeks ago on that very subject because the biggest mistake you can make is is not handling the inspection report properly. So check out this video after this one if you would. But getting the staying in that option period and not waving that right allows you then to review your inspection, see what the deficiencies of the house are and either potentially stay in the contract or get out within that option period. And if you get out, if you void the contract within that option period, you get your earnest money back. If you wave that right, if you if you allow that to be signed without an option period, inspection period, basically you're foregoing your earnest money. Uh because if you run into any problems at all and you want to back out, well, guess what? I'm sorry. You're not getting your earnest money back. And that's usually about 1% of the contract. So on a $300,000 house, you just cost yourself $3,000. Uh no reason for that. Never allow a waving of the inspection or option period. Number three, and this is one you're probably never going to have thought of, never agree to fund appraisal shortfalls. What do I mean? Let's assume you buy a home. It's under contract for $300,000. You order the inspection and you order the appraisal. The appraisal comes back at $292,000. Just throwing out a number. $8,000 short of the contract price, but the lender lends on the lesser of the purchase price or the appraisal value. So, they're going to base all their numbers off of 292, not 300. but you're obligated to pay off on 300 if you waved the appraisal shortfall provision. So, you'd have to be be funded on a $292,000 purchase, but you'd have to come out of pocket for an additional $8,000 in cash just to meet that shortfall. That's if you signed away your right. But if a smart loan officer like myself and realtor could look at the third party financing addendum, here's an example of the third party financing addendum in Texas. It's got a clause in there, FHA clause or VA clause if you're using those types of loans where you can put you can put the number in if you're buying it for 300,000. You slide 300,000 into that little slot right there. And basically that says if the appraisal comes in below the the price of the home under contract, then we we we renegotiate the whole deal or we walk away and do not lose your earnest money. So that's big protection right there. You do not sign away your right to be protected on a on an appraisal shortfall. Hopefully that makes sense. By the way, if you're lacking, you know, clarity and confidence to buy your first home or even your second home, check this out. This is the webinar.the the mortgage.com webinar.the mortgageatriot.com. Go to that site. It it will bring up a little form. It and it allows you to uh join me uh on a once a month Thursday evening webinar where I cover everything. And I mean everything. I go from pre-approval all the way to getting your keys at closing, everything in between. We talk about engaging with a loan officer, engaging an agent, putting down offers, strategies for all these uh for your negotiations, all the things to to worry about during loan process, and finally all the things to know at closing. So, covers a lot. It's the essential road map for first-time home buyers. And fill out that form. I'll see you on a Thursday. We have a lot of fun, by the way. It's only takes about 50 to an hour long. And you'll learn a lot and you'll join me and and you'll just have a great time. So, hope to see you there. Okay. So, the fourth thing you should never allow yourself to agree to in a purchase contract is waving the financing addendum. Now, what is that? Well, let's assume, for example, that you've got the house under contract and you're out of the option period. Uh, it was 7 days, the inspection report was pretty good. You're staying in the contract, and you're marching forward. Guess what? On day 15, all of a sudden, even though you're preapproved, it you you've gone through the loan process and the underwriter have said, "Hey, we found something kind of we just didn't expect here. uh we can't we can't support this loan. We're going to deny the loan. Wham, you are out of luck and you're going to be out of your earnest money unless unless you have allowed yourself to use the financing addendum here. Like here is the third party financing addendum in Texas. As I showed you earlier, it has a little column there. It's called buyer approval. In that little clause there, basically what that says is you have x amount of days. Most people put 20 days or 15 to 20 days to for the underwriter to come back and say, "Yes, you've been approved or not approved." So, one advantage I have is that I can get things approved very quickly. So, I can get that number down to 10, which is a shorter amount of time, obviously, and the sellers love that. so I can get contracts accepted more readily because I have uh streamlined the process and the selling party is has is more likely to say, "Yeah, we'll give you 10 days to make sure that you're approved or not with that underwriter versus, you know, 20 with somebody else maybe." So again, never allow yourself to just completely omit the fancy denim because otherwise you could lose your earnest money and be susceptible to breach of contract and maybe some legal problems. So uh be wary of number four. Okay, so we're down to the last and fifth thing that you should never allow yourself to agree to with the purchase contract, and that is a handshake deal for the seller to stay in the home after you've closed for a certain amount of days. You don't ever want to have just a handshake deal. And in other words, you buy you buy the house, you it gets funded, it gets closed, you sign the papers on May the 30th, but the sellers, you said to them on a side agreement, hey, don't worry, you can stay in the house for another week as you try to get your moving stuff. Do not do that without without a residential lease in place. Here in the state of Texas, we have the TRE form, the seller's residential temporary lease. You want to have everything in writing because it's going to allow you then to charge for that because now they're the renters, right? You own the home now. And even though they might stay for a week or even up to a month, whatever you agree upon, it's going to be outlined in the contract how long they're going to stay, how much per DM you're going to charge them for rent, and you're going to collect upfront a security deposit for anything that might potentially go get uh damage during that time that they're staying there. So, don't do any side agreements. Even though you're trying to be a good guy or good gal, have everything in writing, never go without a seller's temporary uh lease if you're going to be if they're going to be staying beyond the funding and closing date. So, let a savvy and experienced realtor, a real estate agent like myself and a loan officer like myself who knows all but all sides of all the contracts protect you and not allow you to get lose your earnest money. We don't ever want that or to be potentially sued. So all those things we just talked about are for your protection. So again, yeah, if you're trying to buy your first home and in your second, go to the webinar mortgage.com, webinar.theort mortgage.com, and sign up for that webinar. We'll have a fun time, have all your answers for you. We're going to cover from pre-approval to keys and everything in between. And so I'm Kevin Fe, the mortgage patriot. Always on your side. Make it a great one. END OF TRANSCRIPT