Realtors: Error-Proof Your Offer to Purchase and Contract

Purchase Contract Issues to Avoid

Coordinating buyers, sellers, and realtors together to sign documentation can be a daunting task at time for the realtor.  So it is best if the contract is correct the first time.  Avoiding these purchase contract issues will save a lot of time and headaches between signing the contract and the purchase closing.  Plus remember that this is a LEGAL, BINDING CONTRACT so make sure it is fully complete and accurate!

Most Common Purchase Contract Issues During Mortgage Process

  • Missing contract addendumspurchase contract issues to avoid

    If there is an addendum listed on the contract or there are supposed to be addenda to the contract, the mortgage lender will need a copy.  The most commonly missing ones we have noticed lately are the lead paint addendum, Owners’ Association, and the FHA/VA addendum which is required when the buyer is obtaining a VA or FHA mortgage.  List of potential addendums to the contract are found on page 9 section 15 as follows:

    • Additional provisions addendum (form 2A11-T)
    • Additional signatures addendum (form 3-T)
    • Back-Up contract addendum (form 2A1-T)
    • Contingent sale addendum (form 2A2-T)
    • FHA/VA financing addendum (form 2A4-T)
    • Lead-Based Paint or Lead -Based Paint Hazard Addendum for homes built before 1978 (form 2A9-T)
    • Loan Assumption addendum (form 2A6-T)
    • Owners’ Association Addendum (form 2A12-T) – Actually not listed on the contract but is required
    • New construction addendum (form 2A3-T)
    • Seller financing addendum (form 2A5-T)
    • Short sale addendum (form 2A14-T)
    • Vacation rental addendum (form 2A13-T)
    • Other (fill in the blank)
  • Illegible contract

    Remember that a contract has to be uploaded online so it must be clear to start.  If not, an underwriter or others may not be able to clearly read it.  Contracts that are tough to read increase the chances of errors too.  The e-sign disclosures these days are the best way to sign contracts as everything is perfectly clear and easily amended when changes occur.  Try to avoid faxing contracts at least because a fax of a fax of a fax will not be legible.

  • Incorrect address on the contract

    Don’t take the address lightly!  If it is wrong on the contract, then it causes issues with the appraisal, title work, underwriting, mortgage disclosures, and more.  So here is a great solution!  Before completing the address, verify it at USPS or check with our processors.  As the lender, we have to verify the physical address exactly and we can help you up-front.

Most common errors on NC purchase contract issues
Error-proof your NC purchase contract to save time & money!
  • Too much seller paid closing costs for the buyer

    Often buyers leave money on the table because there may be 5% of the price in closing costs paid, yet the loan type may only allow 3% of the price.  In this case the buyer gave the seller 2% of the price too much.  Learn the maximum seller paid costs for each loan type here.

  • Wrong buyers and sellers names on the contract

    Make sure the sellers names match the deed.  Ask the seller’s or buyer’s attorney to verify that seller’s names are the actual owners.  On mortgage loans, the deed, appraisal, contract, and mortgage paperwork needs to match exactly.  Finally, make sure that you go by the buyer’s driver’s license (unless you know they just got married and the name has changed).

  • Changes to the contract not initialed

    This is one of the most common purchase contract issues.  If there is a written change to the contract, make sure everyone initials the changes.

  • Realtor information not completed

    Complete all contact information on page 12 so all parties including the lender, attorney, appraiser, insurance agent, and home inspector can contact the agents when necessary.

  • Missing signatures or initials

    If there is a place to sign or initial, make sure it is signed.  Trust us that underwriters will catch these and everyone will have to get together again for signatures.

  • Oil and Gas Rights Disclosure (Page 6 paragraph 7f) not initial by the buyer on NC contracts

    Most of the time, the contracts we receive these are not initialed at all in this section.  So make sure that it is fully completed and initialed

  • If not using the standard required contract, make sure that it states that any personal property is “conveyed at no appraised value given”

  • Who can be on and sign the purchase contract as well as take title to the home

    VA Loans:  Only a spouse or someone on the loan can take title to the home.   FHA & Conventional:  Anyone can be on title to the home.  USDA:  Anyone can be on title to the home, but USDA will want to confirm the income for the person living in the home.

So whether you are a realtor or someone completing a for sale by owner contract, follow these directions to cut down on the errors, aggravation, and lost time.  If you have further questions, contact us for help.

Written By: Russell Smith

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