In most contracts you will find a time is of the essence clause, real estate purchase and sales agreements are not the exception. What is time is of the essence? In short it is a time frame that if not met usually results in a penalty – in real estate this can mean voiding of the contract, waiving of rights (such as right to inspect), and could possibly cost you money.
Your time lines begin when the contract is first written, the buyer generally gives a time frame for the seller to respond to the contract. If there is a counter offer, there is often another expiration time for the buyers response. Where this really comes into play is after you have a signed around contract.
When the purchase and sales agreement has been signed by both parties the clock begins ticking, you have “X” amount of days to do a home inspection, a neighborhood inspection, water/well/septic inspections, get home owners insurance, apply for a loan, etc. This is not the tme to jet off to the Bahamas or go visit Aunt Alma. Skiping any of these steps, or failing to preform and inform the seller by the allotted times could end up costing you. If, for example, you didn’t gt the inspection done, the sale closed as agreed, and after you took possession of the property you were to find, toxic mold, asbestos, dry rot, water damage, unsafe electrical, well… Lets just say that the court doesn’t always favor the buyer for not preforming, nor does it always punish the seller for not knowing that there was mold under the house. The clean up, repair, replacement often ends up as the sole responsibility of the new home owner. OUCH!
Not preforming due diligence with something like a neighborhood review can mean that instead of the nice quiet neighborhood you viewed at 10:30 in the morning, you may find out that the neighborhood has a high crime rate, drug problems, or is excessively noisy, or even that the neighborhood is being targeted for a development that will cost you all or part of your property.
But what happens if you do get a home inspection, find that same toxic mold and within time frames notify the seller. If you’ve done all the steps, several things can happen. The owner can fix the problem, or if the owner can’t afford the repairs – you can negotiate to pay all or a portion of the repair, or you can simply walk away from a problem, getting your earnest money back in the process.
My advice to you – write down all your time frames, or put them into your PDA. Make sure you’ve got enough time to preform your due diligence. Keep the lines of contact open between you and the seller, notifying them in writing when you’ve completed each time frame. Buying smart, is of the essence!