of inspection has been signed off on and agreed to, the buyer is committed to the purchase of the property, as long as they can secure financing. Then the contract is sent to escrow.

When a buyer is negotiating a purchase and sale agreement they should never forfeit their financing addendum because this is the last agreement in the contract that is for the protection of the buyer in case the buyer cannot purchase the property.

To acquire the property of your dreams you may have to forgo a financing addendum, because of competition from other buyers, but be careful to insure that funding for this property is secured before you do this. The consequences are that you will definitely have a financial loss of at least your earnest money if you cannot purchase the property because your funding does not come through.

The financing addendum will protect the buyer once the inspection period is over, but the buyer has responsibilities here as well. The buyer needs to apply for their mortgage within so many days and they must pursue their due diligence to complete the paper work for the loan and then to qualify for the loan.

If the buyers do not fulfill their responsibilities, there can be severe consequences. If the buyer has not done their due diligence to acquire a loan the seller can rescind the agreement and put their property back on the market. The buyer has lost the property and may suffer some financial consequences if the seller feels the buyer has not fulfilled their obligations.

Once the loan has been qualified and funding is certain, the buyer is legally obligated to complete the purchase and sale agreement. If the buyer does not, the consequence are loss of their earnest money, loss of the property they wanted to purchase. They also risk ruining working relationships with the service providers who helped the buyer during the transaction.

Meanwhile if a seller breaks the terms of a real estate contract, they may be legally bound to repay their listing broker for marketing costs and other fees. The seller may be sued by they buyers and other interested parties if the seller is not careful in rescinding the agreement.

An experienced Realtor is trained to help you in this purchase and sale agreement process. I highly recommend you seek the advice of these trained professionals when purchasing your next property.

Real Estate contracts are serious business. Follow them carefully to protect yourself and your real estate investment.

Learn more about this author, Charles Grimes.
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