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Real Estate Investor University Newsletter
"News, Information and Education for Real Estate
Investors"
Created and Published by Donna Robinson
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How to Write "Creative" Offers -
by Donna Robinson
Part 1 - What
is a legal offer?
Last weeks article received so much positive response, I decided to do a
series on writing offers that contain creative financing terms. This week. I
want to lay some essential ground work for those who might not understand the
general basics of writing offers to purchase real estate.
What is a legal offer?
There are 5 basic conditions that must be met in order
to have a legally enforceable and binding agreement to purchase or sell real
estate. If these conditions are met, the state of Georgia (and virtually any
other state), will consider the agreement to be binding on both the buyer
and seller.
1. Legally competent parties. - Both the buyer and the seller must be of
legal age as defined by the state. In Georgia, this age is 18. And, both parties
must be mentally competent to enter into the agreement.
2. Mutual Agreement must exist between the buyer and seller. There must
be a mutual willingness on the part of both parties, to accept the terms
of the contract. You cannot force someone to agree to your terms if they do not
wish to. Contracts signed under duress or force by one party over the other may
not be enforceable in court. Mutual agreement cannot exist if the terms of the
offer are too vague, or hard to understand.Your offers to purchase should be
very clear in explaining what you are willing to do and how it will be
done.
3. Lawful Objective - Your contract must have a legal outcome in mind.
For example, if you and a
seller deliberately engaged in an agreement with the
intention of defrauding a mortgage company,
the contract is not legally enforceable because it does not
have a legal objective. You cannot enter
into a binding agreement, if that agreement is a violation of
the law.
4. Consideration or Cause - The legal premise here is that both parties
must "give up something" or
perform a specific action as part of the agreement.
This premise can take many forms, but the
simplest and most common example is with regard to
"earnest money". This is money paid by a
buyer to a seller to show that the buyer is serious and
"in earnest", about his or her desire to buy the
sellers property. If the seller wishes to accept the buyers
offer, then the seller must agree to "give up"
his right to sell the property to any other buyer. In this
way both parties take an action that shows
their mutual willingness to agree to the terms stated in the
offer.
5. Contract must be in writing - In order to avoid fraud,
misunderstandings and confusion, all offers
to purchase real estate must be in writing to be
enforceable. Verbal offers are not considered to be
binding offers since it is impossible for a court to
verify the existence of an agreement, or determine
the real details of that agreement.
Now that you know the 5 main requirements of a written offer, we can
address some other questions that are common to real estate investors.
First, an offer does not have to have a fancy format or be on special
paper to be legal. You can take a piece of notebook paper and write an offer on
it. All an offer really has to say is this:
1. Who the buyer is.
2. Identify the specific property for which the offer is being made. (complete
street address including county and state).
3. Show the exact amount of the purchase price.
4. Detail any specific terms that pertain directly to this offer. If it is an
offer in which you are asking a s
seller to finance the property, terms would include the
amount to be financed, the interest rate, the
length of time seller will be expected to finance, etc.
5. Any stipulations that your offer is contingent upon. If you want the seller
to clear out those junked
cars in the backyard prior to closing, this is known as a
"contingency" and should be included in the
"stipulations" section of your offer. If you want the
seller to leave the drapes, furniture, etc, it should
be included in your stipulations. If the seller has to
change the carpet, or paint, all of this would be
included here.
6. Essential contingencies such as the closing date, whether the buyer
will have the right to inspect the
property, whether a termite letter will or will not be
provided, and other general terms like, a
paragraph that explains what
the rights of both parties are in the event that a fire
damages the property before closing. All kinds of
little details can be covered in a typical
agreement.
Standard Purchase and Sales Agreement forms are available at most
office supply stores. But they will not be complete. You should plan to write
include the essential specifics of you particular deal, as outlined above.
While these types of forms are an excellent starting point, you should plan to
get assistance from a real estate professional if needed, to help you add in
your specific terms for your deal. Since every deal is different, the terms
that must be added to every offer will be different. ***
In Part Two next week, will will discuss structuring a basic offer
with seller financing.
In about 4 weeks, I will be releasing a new instruction manual on writing basic
offers for real estate investing. It will include a step by step guide to
writing creative and all cash offers. It will also include a blank contract form
that you may copy and use.
If you are interested in hearing more about offers and how to write them, please
drop me a line with your contract questions or comments. Email me at drobinson@reihelp.com
NOTE: This article is intended only for general information purposes,
and should not be construed as legal advice.
If you need help filling out a real contract, please see your attorney first!
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email drobinson@reihelp.com or call 404 542-9903.
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About the Author and Publisher of Real Estate Investor Weekly...
Donna Robinson is an investor, author, speaker, and publisher of
books and numerous articles on real estate investing.
A subscription to
her newsletter is available at her website, http://www.realestateinvestoruniversity.com
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is included: http://www.reihelp.com
Copyright Donna Robinson - GHP Publishing, 2004 All rights reserved.
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