The term ‘addendum’ in real estate is familiar to your Lang Realty agent, but may be new to you. “What is an addendum in real estate? “An addition or supplement made to a contract that modifies, clarifies, or adds specific terms or conditions,” according to the National Association of Realtors. “As with common contract laws, addendum laws also vary from state to state, and real estate professionals must follow local jurisdiction.”
What is the purpose of an addendum?
To meet the specific needs of buyers and sellers to protect their interests before the real estate transaction is finalized. “Addendums can override parts of the original contract and expand on others. Addendums are drafted and signed to prove both buyer and seller agree. This can include modifying the purchase price, closing date, and financing terms. Adding contingencies like home inspections or repairs. Resolving ambiguities in the main contract,” according to the NAR.
What are the types of real estate addendums?
“Inspection contingency addendums establish the course of action for the sale should a buyer find defects in the property. This includes the period for the buyer to conduct the inspection. Per contingency addendums, if the home does not pass inspection, the buyer and seller can renegotiate the terms of the sale. Another option contingency addendums provide is releasing the buyer from the agreement. Inspection and contingency addendums also allow the buyer to waive the faults found in the home if the seller is unwilling to renegotiate. The home buyer would then become responsible for the costs of repairs,” according to the NAR. “Appraisal addendums protect the buyer from acquiring an undervalued home. If a property appraisal does not value the home at the minimum sale price, an appraisal addendum allows the buyer to withdraw from the sale. The buyer then has the right to terminate the contract and receive their money back.”
A financing addendum “gives the buyer a specified amount of time to obtain the financing to purchase a new home or… allows the termination of the contract or a time extension to explore other mortgage options.” A writing addendum should focus on using clear and concise language understandable to both parties and not legalese.
What’s the difference between an addendum and an amendment?
It’s a subtle difference, and your Lang Realty agent can explain what you may need. An addendum adds new terms or conditions to an existing real estate agreement. An amendment modifies the existing terms.
