What Legal Contracts Are Used When Buying Michigan Real Estate?

When you buy real estate, you need a contract. Chances are, much more than one form will be involved in your real estate transactions. If you’re considering a career in Michigan real estateMichigan Real Estate License, here are some basic contract documents you will likely encounter. It’s a good idea to familiarize yourself with them in your pre-licensing courses. You might consider reviewing them several times outside of class before placing client offers.

Purchase and Sale Agreement

A Purchase and Sale Agreement in Michigan communicates how the buyer will purchase the property. Sometimes referred to as the “offer sheet,” the form is the primary piece in the transaction package. Here is some of the information it will include:

• Purchase price

• How you will pay (cash, loan, other)

• Earnest money-handling

• Closing date

• Other contract terms like tax prorate terms, miscellaneous items left on the property, terms of the due diligence period, etc.

Disclosures

Michigan real estate transactions also require specific disclosures. Before everyone signs the purchase and sale agreement, the seller must issue a Seller’s Property Disclosure FormImages 2018 07 Michigan Sellers Disclosure Statement.pdf Eforms.com to the buyer’s agent. This form offers a detailed description of property systems and appliances. It allows the seller to reveal any known defects or repairs needed. It will include a lot of information. Some systems covered include:

• Electrical

• HVAC

• Plumbing

• Kitchen Appliances

• Bathroom fixtures and appliances

• Water heater

• Interior and exterior structural components

If the home was built before 1978, you will need a Lead-Based Paint Disclosure FormLead Based Paint Disclosure #Homebuyers Eforms.com. This document indicates the seller’s knowledge of whether lead-based paint was used in the home. It also explains the potential health effects of lead exposure. If there is a concern about lead-based paint in the house, it’s a good idea for the buyer to have an inspection specifically looking for lead-based paint.

Addendums

As you go through the transaction process, contract terms could shift. You may advise your client to have a home inspection. This could reveal some repairs both parties were not aware of. If a loan is being issued for payment, an appraisal is required, too. If the appraisal price is lower than the initially agreed-upon price, this could pose funding problems. You may need to renegotiate the price or other terms of the deal.

These are common issues during a Michigan real estate transaction. Cool heads often prevail, but if purchase terms change, you must use an addendum to indicate the changes. Some deals may even have multiple addendums. The Michigan Association of Realtors uses a reasonably generic addendum form0 Documents Micaraddendum%5B1%5D.pdf Portals allowing an agent to explain any changes to a contract. You don’t have to use this form. There are others available online as well.

Many Details to Remember

Don’t let these forms intimidate you. Like anything else, the more transactions you experience, the more comfortable you will be with all the paperwork. Once a deal is complete, you will issue your client a thick folder full of documents. Everything from inspection reports, contract documents, explanations of HOA community rules (if applicable), and several other documents will be involved.

It’s essential to have a good broker mentor youMichigan How To Choose Your Real Estate Brokerage In Michigan Career Center early on. It will feel like a lot of details are being overlooked at first. However, your broker can help guide you through successful transactions and ensure all your contract documents are in order.