Assignability & Financing Of A Real Estate Contract

Sections 7 & 8 of the Florida "As Is" contract cover the assignability and financing portions of your offer to purchase. Both of these parts of the contract are very important but most of the time they are no real problem. This is however a contract to purchase a home, the buyer and seller should carefully evaluate what they are filling in and what the message this contract is conveying. First lets take a quick look at Assignability.

Process Of Closing On A Home

Assignability

This part of the contract basically means that the person submitting the offer to purchase to the seller can assign or will not assign the contract to someone else or another entity. 90% of the time this part will be left blank or the may not assign this contract portion will be checked. Who would want to assign the contract? Possibly a house flipper or someone wanting to assign the property to a trust, another person or corporate entity.

A big red flag goes up to the seller if the person who is submitting the offer checks the box that says the buyer mas assign and be released from liability. Seek out legal advise if you are not perfectly clear on what this part of the contract says.

Financing

This is another very interesting and important part of the contract. If you are paying cash much of this part does not apply to your situation. All the realtor does for you here is fill out the information that you provide them with. Most of it usually comes straight off of your latest loan pre-approval letter. This information matters quite a bit and it may come into play if you get into an escrow dispute.

Read it carefully as there are lines within it most people are not aware of. For example, the buyer authorizes the buyer's mortgage broker, lender and closing agent to disclose information to the seller and sellers broker. It is not uncommon for the sellers agent to call the buyers lender.

Appraisal Contingency

I am not an attorney or financial advisor. I have however seen some disputes over escrow and even whether you need an appraisal contingency vs this finance contingency. That boils down to rather or not the appraisal comes in low and whether or not you bank will still approve the loan. If you have placed a lot of money down, the home finances a little lower than asking price then the bank may still approve the loan.

If you are for example using a VA loan and 100% financing and the home appraised $10,000 less than asking the bank will probably not finance that loan without changes. Don't be afraid to speak up if you do not understand clearly or seek out assistance. Don't work with people who are more interested in making the sale that assisting you professionally.