HOME/real estate news How to write a perfect home purchase You've spent weeks, perhaps months, searching for the ideal home to buy. You finally found it Now the fun of negotiating for its. purchase begins, Often the real estate agent will drag out1 a "standard purchase contract* from his or her briefcase. Ask who wrote the printed contract. If it was prepared by the Realtor's association, you can be sure it primarily protects the realty agents. : The form you are presented by the realty agent may be the misnamed "short form" of a just a; few pages. Or it might be the "long form*' used in some states, consisting of eight or more fineprint pages. In a few states, a •bomb purchase .contract can only be prepared by an attorney. Although state law may.require a few clauses in home purchase offers, buyers and 'sellers are free to .negotiate additional provisions. Here are the essentials to include in the perfect home purchase offer: (I) IDENTIFY THE PROPERTY, THE PARTIES AND THE PRICE. Real estate purchase contracts usually first identify the property being sold, the name(s) of the buyer(s), the price offered and the amount of your good faith earnest money deposit. If your offer price is substantially below the asking price, a large earnest money deposit check accompanying your offer may impress the seller into accepting your low offer. Or, you may want to make a low deposit, such as $1,000, to be increased upon removal of the contingencies. Be sure the property is correctly described, such as by street ad- dress, parcel number, legal description, or other method so there is no misunderstanding. This is especially important when buying rural properties. (2) INCLUDE A .FINANCE CONTINGENCY CLAUSE. Unless you are paying 100 percent cash for the property, your ideal purchase offer should include a mortgage finance contingency clause. .Hopefully, you have obtained mortgage pre-approval from a lender. But your offer should contain a finance contingency clause just in case the home doesn't appraise for the price you offered. If you can't get the finance terms specified, then. you can cancel your purchase offer and get your deposit refunded. For example, your offer might specify: "This purchase offer is contingent upon buyer and property qualifying for a new 90-year first mortgage of at least $100,000 at a fixed interest rate not exceeding 8.5 percent with a loan fee not more than two points and a monthly payment of $768.91." (3) INSIST ON INSPECTION CONTINGENCY CLAUSES. Most home buyers today insist on a Contingency for a professional home inspection. Be sure to accompany the inspector, who should be able to explain Che seriousness and cost of repairing any defects discovered which the seller did not previously disclose. Depending on local customs, you may want to also make your offer contingent upon your approval of additional inspections for termites, pest control, energy efficiency, radon, plumbing, electrical, and the roof. Be sure the purchase offer specifies if the seller is to pay for any necessary repairs. Usually, the seller will insist on a dollar limit for such repairs. (i) WATCH OUT FOR AN "AS IS" CLAUSE. Many sellers offer their homes for sale "as is." Although .home sellers must disclose known defects, an "as is" sale means the seller won't pay for any repairs, When a seller advertises the house "as is/* that usually means it is in poor condition. "Buyer beware*' should be your motto when buying an "as is** house which needs an extra-thorough inspection. (5) ITEMIZE PERSONAL PROPERTY YOU WANT INCLUDED. A home real estate sale does not include any personal property, such as furniture, appliances and window coverings. If you want some of these Hems included in the sales price, be sure to itemize them in your purchase offer even if the listing information says they are included. (6) BEWARE OF AN ARBITRATION CLAUSE. Many preprinted real estate purchase contracts include an arbitration clause for any disputes which may arise. If you agree to this clause, please be aware you give up your legal rights to a jury trial and the dispute will be decided by an arbitrator rather than a judge. Arbitration rules are far different from court .rules. Generally, there is no appeal if you disagree with the arbitrator's decision, even if it is contrary to statutes or legal precedents. (7) BE PREPARED FOR A COUNTEROFFER. Although your home purchase offer may be accepted by the seller without any changes, sellers often find the terms offered are not acceptable. A sharp real estate agent then asks the seller to make a written counteroffer to the buyer. When the seller makes a counteroffer changing even . the slightest term, the original offer is rejected and cannot be later accepted. Before a sale results, many counteroffers often go back and forth between the buyer and seller. This is a normal part of .the fun of buying a home. A FINAL WORD. In addition to the typical home purchase offer terms discussed above, the purchase offer you are presented by the realty agent will contain other provisions. Before signing, be sure to study the agreement carefully. If you don't understand it, ask your attorney to review it before you sign. Never make a home purchase offer unless you are certain you want to own that residence. Some home buyers incorrectly think they can get out of their purchase offer if they change their minds. That can be a very expensive mistake. Although home buying may seem complicated, thousands of buyers enjoyably purchase homes every day. With the help of a good real estate agent, your home purchase offer can lead to a successful acquisition. Mortgage interest tax break faces uncertain future By Stare Brown Dallas Morning News With congressional budget cutters scrutinizing everything from Big Bird to Medicare, you can't fault home builders and real estate agents for worrying about the future of the home mortgage deduction. Housing industry supporters admit that the threat of a new cap or total elimination of the most popular federal tax deduction isn't immediate. They are nevertheless concerned about how far federal lawmakers might go to trim costs. "And if they ever enacted balanced-budget legislation, all bets will be off/' said Bruce Hahn, president of the American Home Owners Foundation, based in Washington, D.C. "I don't think you can gel (o the balanced budget without some significant tax increases, and they would have to go after sacred cows at that point." Any cut in homeownership deductions will bite deeply into Americans pockelbooks. More than 27 million taxpayers take advantage of mortgage and home property tax deductions, which add up to more than $50 billion a year in tax savings. For many taxpayers, owning a home is the best way to significantly lower their income tax bills. The average mortgage interest deduction was about $7,300 in 1992, the most recent year for which figures are available. Taxpayers can now deduct annual interest payments on mortgages up to $1 million in value. A new ruling also allows home buyers to deduct prepaid interest, or "points." Although even the most fervent housing supporters don't suggest that Americans would all switch to renting if the mortgage deduction gets axed, recent surveys support their claims about these write-offs. Tax benefits are one of the chief reasons people say they own homes, the National Association of Home Builders found in a 1994 poll of homeowners and buyers. Almost half of Americans sur- 8D~ News-Press • Sunday, May 21,1995 veyed said they will change their home-buying plans if homeownership tax deductions are eliminated. "Home builders feel very strongly about this/' said Gopal Ahluwalia, a researcher with the builders association, based in Washington, D.C. "Eighty percent feel that if the mortgage interest deduction was eliminated, they would lose business." The potential effect on the economy is great. Each year, builders sell almost 1 million single-family homes with an average price of more than $120,000. Home buyers purchase about 3 million or so existing homes each year. Given the pressure from homeowners, builders and real estate agents, how likely is Congress to take on a reduction in mortgage interest deductions? "The short-term outlook for repeal - thank God - is dim, said Hahn, whose homeowners group lobbies lawmakers. "But there is a strong push in Washington for budget austerity. I don't think you should take anything for granted." Housing interest group leaders say the mortgage interest deduction already has fallen off the list of untouchable benefits. "Senior members of Congress are on record that the mortgage interest deduction is not sacred," sato Stephen Driesler, vice president and chief lobbyist for the National Association of Realtors, Driesler said some congressional leaders, including Senate Finance Committee Chairman Robert Packwood, ROre., have suggested reducing mortgage tax deductions to help pay for a proposed capital gains tax cut. Lawmakers who are pushing flat tax proposals also would eliminate homeowners write-offs, Driesler said. 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