Currently I am working with a young couple having 1year+ old kid looking to buy their first home. They both are well educated and seems to have been researching the home buying arena in Houston for few months which I can guess from their decent questions asa first timer. I love share and guide these kinda of clients who knows just a little bit about what they are getting into and like to learn from others and try to make smart decision accordingly.

I showed them couple of houses and they liked a house and we went ahead and made an offer. While making an offer, they asked some valid questions about contract which is relavant to any buyers. So I decided to put those questions with answers explaining them in detail relating to the TREC(Texas RealEstate Commission) Contract in this blog post for future buyers.

1. Is the personal property like appliances, stove included with the sale?
   Usually home sale includes real property with all the improvements and accessories attached to it including stove, dishwasher, ceiling fans etc., Appliances like refrigerators, washer, dryer or not attachements and considered personal property. Below picture is the section 2 from the TREC Contract which explains in detail.
   
   
   Sometimes sellers might include some personal property as part of the sale. Realtor needs to check the listing to makes what’s included and excluded. If they didn’t specifically mentioned any appliances included in the listing, buyer should be able tonegotiate using addendum part of the contract.
2. How much earnest money should I offer?
   There is no standard number. Usually it’s 1% of the offer price but sometimes it’s dicated by the seller depending upon on the type of sale. For example, if its a foreclosure and REO property, seller might need minimum $1000 to start with. In a normal seller scenario, 1% is an acceptable figure. Sometimes buyer agent will also tell the buyer to put more earnest money to show the seller that they are really interested but make sure you have back out options clearly mentioned in the contract so you won’t lose your earnest money incase of an issue. See the picture below showing the section 5 of the contract.
   
   
   
3. Whom should I make the Earnest Money cheque payable to?
   In almost all resale scenario, you should make the personal cheque or cashier cheque payable to title company. Never make a cheque payable to the seller or seller agent name. The reason being you have better chances of getting your money back when the contract fails.
4. When I will be able get my Earnest Money back if I need to back out?
   You should be able to get your full refund of your Earnest money back when you back out during the option period due to any reason. You also will be entitled to get the Earnest Money if you credit is not approved and credit approval addendum is included in your contract.
5. What situation I will lose my Earnest Money?
   You cannot just back out of the contract after option period and credit is also approved. You will all your earnest money after this period. If you need to back out after this period for some unavoidable reasons, you need to mention or show legitimate evidence to the sellers and they might be able to refund the earnest money with their own discretion

I only covered a few questions and answer pertaining to first page of the contract and still have more to come. I will try to post them in my future blog posts.

Keep reading, become a smarter consumer…

About Vijaianand Thirnageswaram

I am a Proud Realtor of Texas, trying to guide and help clients to find their dream home and educate them to buy them for right price. I am also a Candidate for CFP who has more financial knowledge which allows me share and educate clients in any financial decision making process.

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