This article will focus on making offers for residential and multi-family homes. Attached is a blank contract for you to use as a reference, as we’ll go line-by-line down the contract and explain each section. Before we begin, if you’re not working with an agent, get one. Working with an agent is free for buyers and they will be able to walk you through the process and help negotiate on your behalf.
Top Box: The buyer fills out the contact information for the buyer and for the seller.
Line 3: Date of the Offer
Lines 5-10: The address and the legal description of the land, which can be found at your Parish/County Assessor’s Office website. (Orleans Parish found here) http://nolaassessor.com/search1.html
Lines 11-22: Includes all of the basics of everything you’d expect to stay with the house but includes them in the contract so there is no question as to whether they stay or not.
Lines 23-29: Distinguishes what items stay with the property.
Line 30-33: Distinguishes the rights to the minerals of the land, who retains them. Writing “0%” in the box on 31 indicated that the buyer retains all mineral rights. This is important so that, if you were lucky enough to discover your were literally sitting on a goldmine, you retain the rights to the value of those minerals.
Lines 34-37: The price you are willing to buy the house for.
Lines 38-45: When you would like to make the transaction and transfer keys.
Lines 46-51: Determine whether your sale is conditional upon the sale of your property.
Lines 52-78: How you plan to pay for the home, confirming that you have the means to pay for the home, and the amount of time you need to supply verification to the seller from your lender to prove you’ve applied for the loan.
Lines 79-88: This explains that taxes, condo fees, insurances that are paid for the year up front or at the end of the year will be split between the two parties at a prorated amount.
Lines 89-98: If you are getting a loan for the house, your purchase is subject to an appraisal. An appraisal is when the bank has the house evaluated and given a numeric value. They will only give a loan for the agreed purchase price or the appraisal amount, whichever is less. If it is less, the buyer needs to come up with more money or the seller needs to come down on price.
Lines 99-112: Offers are accompanied with a deposit and these lines detail how much your are willing to put down and determine who will hold the deposit money in escrow (usually the brokerage of the listing agent). The more money you put up with the offer the more attractive your offer is and the more legitimate you are as a buyer.
Lines 113-137: Specifies under what circumstances the buyer will receive his deposit back if the deal does not close.
Lines 138-144: The buyer is given five days to review any special assessments or current leases on the property after the acceptance of the offer and, if unsatisfactory, walk away from the deal.
Lines 145-149: More forms are needed if you are buying with construction pending.
Lines 150-188: The inspection period is a period of time determined by the buyer on line 157, usually 7-14 days, to have a contractor/termite company/plumber/etc. come out and inspect the property for defects and shortcomings not indicated in the Property Disclosure. Once the inspection is done the buyer has the opportunity to ask for the defects to be fixed or for an appropriate reduction in price.
Lines 189-200: Self explanatory. The seller/selling agent will have this information. Helpful tip: Orleans Parish do not have any private septic treatment systems.
Lines 201-210: You decide if you want the seller to purchase a warranty on all appliances on your behalf. You can get a decent policy for $500.
Lines 212-229: Almost all properties these days are sold in “as-is” condition and you’d be checking off Option B. Option A would mean that if the home lost more than half its value within the next year the buyer can get a refund from the seller. Great for the buyer, no seller is going to accept that offer.
Lines 230-241: This confirms that the seller does actually own the property and that if transferring the title takes longer than the closing date how long you can extend the contract for. If the seller cannot produce the title this lays out remedies for the buyer.
Lines 242-247: This gives the buyer the right to walk thru the property one last time before the act of sale to make sure the property is in as-good condition as agreed upon and befits the terms of the contract before signing the dotted line.
Lines 248-268: Self explanatory
Lines 269-283: State requirements
Lines 284-286: Deadlines and what they mean.
Lines 287-293: Self explanatory
Lines 294-312: Limits personal liability for the realtor/brokerage if you’re working with one.
Lines 313-322: More information might be needed, this is where you specify that additional information is attached.
Lines 323-332: Self explanatory
Lines 333-344: Allows the use of email and messages included per the contract to be legally binding mode of communication.
Lines 345-350: This is a legally binding contract! Consult a professional.
Lines 351-354: The amount of time the offer is valid. In Louisiana, you are legally bound to this from the time the offer is submitted to the expiration date or the rejection of the offer, whichever comes first. Or, if the offer is accepted, you are legally bound to the offer. There are ways out of the contract, but that is a story for another day.