CONCESSIONS: WHAT ARE SELLER CONCESSIONS? http://www.quickenloans.com/blog/what-are-seller-concessions-or-contributions-5096
Q: When you write a BINSR that the seller responds that they will give a credit at closing to the buyer in lieu of doing requested repairs (and you also do an Addendum that states only the credit by seller to buyer)…..does this then count on the listing in the MLS as seller concessions? I always thought that seller concessions were what was negotiated when the offer was made. When it is a seller credit in lieu of repairs, the seller could have done repairs and then it would not be counted as a seller concession. So this is confusing to me. What is the broker’s office stance on this issue? A: Giving a credit in lieu of repair(s) is considered a seller concession, and is treated as such on the settlement statement. Depending on how that addendum is written, it may or may not have the same restrictions as Seller Concessions outlined in sect 2j of the purchase contract. Regardless, it is still considered a seller concession.
CONCESSIONS: CLOSING COSTS, SELLER TO BUYER CREDIT LANGUAGE + overrides language in contract that limits WHAT items can be credited).
1) “Seller agrees to credit buyer $x at COE which may be applied to any and all borrower closing costs including loan costs, title fees, escrow fees, pre-paids, appraisal, HOA fees, capital improvement fees, home warranty or any other closing cost approved by lender at buyers sole discretion.” However should the total buyer closing costs be less than the agreed amount of $4,500 both parties agree to a principle price reduction by the amount of the remaining balance.”
2) “Seller agrees to contribute a total of $x towards buyer closing costs which include but are not limited to pre-paids, appraisal fees, loan costs, title and escrow fees, home warranty and any other closing cost approved by lender at buyers sole discretion. Any unused portion or amount disallowed by lender shall remain with the seller.”
3) “Concessions shall include any of buyer’s acquisition costs, including but not limited to items listed in section 2j of the purchase contract along with any other cost approved by lender at buyer’s sole discretion.”
4) “Should funds remain from section 2j of the Residential Purchase Contract, the Lender, at buyers and lenders sole discretion, may use those funds to pay for additional HOA fees, Home Inspection, Home Warranty, or any other fees that the lender deems reasonable and acceptable.”
CONCESSIONS, TOTAL: “Seller to credit buyer an additional $X at close of escrow, bringing total seller concessions to $Y.” OR “Seller to credit the buyer and additional $X. Total concessions to be $X. This is exclusive of any other mutually agreed amounts in the Additional Terms of this contract.”
CONCESSIONS, REMOVE CONCESSIONS DUE TO LOW APPRAISEL (or any reason). “Seller & Buyer acknowledge and agree that contrary to line #x of the PC, seller concessions shall be a total of $0 (or, shall read $0).” OR
“New Sales Price shall be Appraised Value of $x.” “New Sales Price is $x” or “Sales Price is hereby Reduced to $x.” “Seller concessions are hereby reduced to $x (or x% of new or existing sales price).”
CONCESSIONS, BACKGROUND--Pre Qual or LSU says buyer relying on concessions but concessions removed, REVISE LSU
CONCESSIONS REMOVED, COUNTER OFFER LANGUAGE: "Buyer to provide an updated pre qual or LSU within 48 hours of contract acceptance with seller concessions removed as a requirement."
CONCESSIONS: Q: Prequalification says no but buyer is asking for concessions in purchase contract. A: They don’t need the concessions. Probably submit a counter offer removing concessions.
CONCESSIONS: RAISE PRICE SO CAN ASK SELLER FOR CONCESSIONS? Q: I am representing the buyer and we are within the 10-day home inspection period. We offered full price and didn't ask for closing costs as my buyer thought she would roll her closing costs into her loan. She now doesn't want to do that because her interest rate will go from 4% to 4.5 or 4.625.
The home was priced on the low end of the comps so I asked the listing agent if we could raise the price 5k and sellers give 5k for CC's. The listing agent is worried about that flagging the appraiser. My questions are. If seller is willing to do this could we just give them a new pg one with the new price and a new pg 3 with the 5k CC's or would we have to cancel this contract and write a new one?
A: You cannot just replace pages within a contract - the buyer and seller can formally cancel the contract and escrow and re enter into a new agreement. Jenny
con·cil·i·a·to·ry, kənˈsilēəˌtôrē/Submit adjective intended or likely to placate or pacify. "a conciliatory approach"...
Once the buyer owns the property, any problems with the property condition are the buyers responsibility (unless fraud, misrepresentation by seller).
CONDITION: SEE “PREMISES IN SUBSTANTIALLY THE SAME CONDITION”
CONDOMINIUM: Arizona Condominium Act: See ARS 33-1228
CONFIDENTIALITY: Agent Cannot Disclose Information Learned During Representation: By Christopher Combs | February 1, 2019
Question: Our brokerage firm had a six-month listing on a five-acre mini-ranch near Wickenburg. Although we were in escrow three times in this six months, all three buyers canceled because of a potability problem with the water from the well. The listing has expired, but a friend that I have known since high school contacted me to discuss making an offer. I don’t want to represent my friend in making an offer, but can I at least tell my friend about the potability problem with the water?
Answer: Probably not. After the term of a listing agreement expires, the agency relationship between the seller and the listing broker ends. Although the agency relationship ends, the listing broker generally cannot disclose any information learned during the term of the listing agreement. Therefore, your fiduciary duty survived the expiration of the listing and requires that you keep this information about potability of the well water at the mini-ranch confidential.
Note: This duty of confidentiality generally lasts forever and only a court instruction to disclose this information would relieve you from this duty.
When selling a home where the buyer is represented by another HomeSmart Agent, is the Buyer or Seller Agent responsible for initiating the Dual Agency Agreement?
A: The buyers agent should prepare the consent to limited representation form at the same time they write the offer. They will present that to the listing agent along with the purchase contract. The listing agent should present that first to the sellers, explaining that HomeSmart will be representing both sides in the transaction.
CONTINGENCY, ADD CONTINGENCY: This contract is contingent upon Sellers Receipt and Approval of acceptable engineering report on Replacemen Property Seller is purchasing out of state. If this contingency is not removed by xx/xx/xxxx, this contract shall be immediately cancelled and all Earnest Money shall be immediately returned to the Buyer. Inspection period shall begin when Seller gives notice that this contingency has been Satisified/Removed.”
CONTINGENCY CLAUSE: A contingency clause defines a condition or action that must be met for a real estate contract to become binding. A contingency becomes part of a binding sales contract when both parties (i.e., the seller and the buyer) agree to the terms and sign the contract.
CONTRACT: NOUN: A written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law. synonyms: agreement, commitment, arrangement, settlement, understanding, compact, covenant, bond;
Enter into a formal and legally binding agreement. synonyms: undertake, pledge, promise, covenant, commit oneself, engage, agree, enter an agreement, make a deal"the company contracted to rebuild the stadium"
CONTRACT FOR DEED: A contract for deed is basically a seller carry type transaction. A Contract for Deed is a tool that can allow buyers who either don't qualify for traditional lending options or who want a faster financing option to purchase property. ... The seller retains legal title to the property until the balance is paid; the buyer gets legal title to the property once the final payment is made.
co·nun·drum: a confusing and difficult problem or question. synonyms: problem, difficult question, difficulty, quandary, dilemma
CONVEY AT CLOSING: This contract is contingent upon the successful conveyance of the unrecorded easement (or whatever, see attached) which is to occur simultaneously along with the closing of the property located at 123 Main Street.
CORRECTION ON CONTRACT, WRONG BOX CHECKED: “Line #xxx of the Purchase Contract was erroneously checked/marked, and is hereby considered unchecked/unmarked.” OR “All documents shall be amended to indicate the correct premises address as: 123 Main Street, Tempe, AZ.”
CORRECTION: “Counter Offer #1 to reflect unit #5.” (Or whatever correction is, on offer, counter, addendum, etc).
CREDIT AND BACKGROUND CHECKS: NTNONLINE.COM for credit and background checks. https://ntnonline.com/ (Use promo code HOMESMART)
CRITICAL DATE LIST: Q: I was wondering if there is a quick reference check list or timeline guide for deadlines available as supplement the full rules and regulation guide to help make it easier to meet deadlines (status change requirements, lock box removal, etc.). A: The Critical Date List on zipForms is a nice tool to help manage deadlines and due dates in a transaction. Many agents are using it.
CRITICAL DATE LIST: SEE “NEW AGENT”
CURE NOTICE FOR HOA VIOLATIONS (PAINT, LANDSCAPING, ETC): 1) Demand an update to the SPDS! Give a short period of time to receive. It doesn’t matter how we learned of the issue (title, HOA, Listing Agent, Copy of Invoice left on counter-top, etc). Write on CURE notice: “Failure to update the SPDS as required under section x of the purchase contract, “CHANGES DURING ESCROW.”
CURE NOTICE, UPDATE SPDS due to 1) CHANGES DURING ESCROW, 2) SUBSTANTIALLY SAME CONDITION
(Disclosure must come from seller, may initially hear from 1) title co 2) HOA 3) Listing Agent)
For example, Failure to Disclose HOA Violations (Paint, Structural, Landscaping), or Failure to Disclose water leak in kitchen.
“Sellers Failure to update SPDS as required under section 4f of the Purchase Contract, “Changes During Escrow”. Buyer has become aware of….”
“Failure to deliver Premises in substantially the same condition as of the date of Contract Acceptance under section 6L of the Purchase Contract, “Walkthrough(s)”.
CHANGES DURING ESCROW: AAR RESIDENTIAL REAL ESTATE PURCHASE CONTRACT, section 4f, Changes During Escrow: “Seller shall immediately notify Buyer of any changes in the Premises or disclosures made herein, in the SPDS or otherwise. Such notice shall be considered an update of the SPDS. Unless Seller is already obligated by this Contract or any amendments hereto, to correct or repair the changed item disclosed, Buyer shall be allowed five (5) days after delivery of such notice to provide notice of disapproval to Seller.”
CHANGES DURING ESCROW: SPDS, NOTIFICATION TO SELLER TO UPDATE SPDS DUE TO CHANGES DURING ESCROW
REGARDING SELLER DISCLOSURE, sect xx of the Purchase Contract, CHANGES DURING ESCROW
PLEASE UPDATE THE SPDS TO REFLECT RECENT PROBLEMS OR REPAIRS THAT MAY NOT HAVE
BEEN DISCLOSED AND/OR DISCOVERIES MADE IN THE CLUE REPORT OR BY THE BUYERS INSPECTIONS TO WIT:__________
CURE NOTICE, CONDITION OF PREMISES (CITE WHEN REPAIRS ARE INCOMPLETE): (Question, how could buyer cancel if seller is already obligated to make repairs, as per language in “Changes During Escrow”, and outlined in the sections below? Answer, Argument is based on whether we have the seller, or buyer). (See Changes During Escrow Language)
Sellers have/have not provided an updated SPDS and notification to Buyers that a slab leak/water leak/flood has occurred during the escrow period. This notification is a requirement at outlined in the AAR Residential Real Estate Purchase Contract, section 4f, CHANGES DURING ESCROW.
“Seller(s) has/have not delivered the Premises in substantially the same condition as of the date of contract acceptance.” (NOTE ISSUE, IE, SLAB LEAK, FLOOD/WATER LEAK, DAMAGE, DEAD LANDSCAPING, MISSING FIXTURES, HOA VIOLATION, ETC).
Seller is obligated to deliver the premises in substantially the same condition as of the date of contract acceptance as outlined in the AAR RESIDENTIAL REAL ESTATE PURCHASE CONTRAC T, as follows:
WARRANTIES, section 5a “Seller shall maintain and repair the Premises so that at the earlier of possession or COE, the Premises, including all personal property included in the sale, will be in substantially the same condition as of the date of contract acceptance.”
WALKTHROUGH(S), section 6l “Seller grants Buyer and Buyer’s inspector(s) reasonable access to conduct walkthroughs(s) of the Premises for the purpose of satisfying the Buyer that any corrections or repairs agreed to by the seller have been completed, and the Premises are in substantially the same condition as of the date of contract acceptance.”
RISK OF LOSS PROVISION, section 8b: AAR Residential Real Estate Purchase Contract, section 8b, RISK OF LOSS: If there is any loss or damage to the Premises between the date of Contract acceptance and COE or possession, whichever is earlier, by reason of fire, vandalism, flood, earthquake, or act of God, the risk of loss shall be on Seller, provided, however, that if the cost of repairing such loss or damage would exceed ten percent (10%) of the purchase price, either Seller or Buyer may elect to cancel the contract.
You should also think about some indemnification language and re-emphasize the Buyers seeking legal advice. Buyer agrees to indemnify and hold harmless HomeSmart and Selling Agent regarding slab leak repairs. "Should Buyer/Seller close escrow with incomplete repairs, Buyer does so against the advice of HomeSmart. Buyer agrees to defend, indemnify and hold harmless HomeSmart against any and all claims that may be made regarding the property and its condition." BUYER/SELLER IS HEREBY ADVISED TO SEEK LEGAL, TAX AND ANY OTHER PROFESSIONAL ADVICE DESIRED BY CLIENT.”
CURE NOTICE RESOLVED LANGUAGE “We now consider the cure notice sent xx/xx/xxxx to be both resolved and extinguished as the (buyer/seller) is now in full compliance with the terms of the purchase contract.”
CURE NOTICE, CANCELLATION AFTER CURE NOTICE EXPIRES “Pursuant to the cure notice delivered on xx/xx/xxxx (see attached) and three (3) days having passed without the non-compliance being resolved, the contract is now in breach and the non-breaching party (seller or buyer) hereby elects to cancel this transaction as per section 7b of the purchase contract. Earnest Money to be immediately released to the Seller."
CURE NOTICE RECEIVED, BUYER HAS FAILED TO SIGN LOAN DOCUMENTS NO LATER THAN 3 DAYS PRIOR TO COE
“No later than 3 days prior to the COE date Buyer shall either: 1) Sign all loan documents, or, 2) Deliver to seller or escrow company notice of loan approval without PTD conditions AND date(s) of receipt of Closing Disclosure(s) from lender, or 3) Deliver to seller or escrow company notice of inability to obtain loan approval without PTD conditions.”
If buyer is unable to sign, you can resolve this CURE by delivering an updated LSU with Line #58 and Line #62 checked YES and DATED. This will meet the requirements of item #2 on line #73-74 of Purchase Contract in lieu of Buyer signing 3 days prior to COE.
CURE PERIOD NOTICE DOES NOT APPLY: “In the event that (seller/buyer) does not/fails to (state performance) by xx/xx/xxxx, (seller/buyer) may immediately cancel this contract without delivering a CURE notice; section 7a of the Purchase Contract shall not apply; and Earnest Money shall be immediately (returned/released) to (seller/buyer).”
Just saying “seller/buyer may cancel” may not be enough. RISK REDUCTION: Otherwise, if you deliver cancellation instructions from the (seller/buyer), it could be interpreted as an improper cancellation and the (sellers/buyers) Earnest Money could be at risk.
For example, when additional terms are added to the contract, and a party fails to perform, is it curable? (If permits are not obtained by xx/xx/xxxx, buyer may cancel). Would this require a CURE notice?
CURE PERIOD DOES NOT APPLY: Buyer and Seller agree that COE shall be on xx/xx/xxxx, and that EM shall be non-refundable to buyer in the event this transaction fails to close for any reason other than seller breach. If the transaction does not close by xx/xx/xxxx, Buyer and Seller agree that this escrow shall be immediately cancelled with no need for a cure period notice. Section 7a, Cure Period shall not apply.
Buyer and Seller agree that if X does not Y by xx/xx/xxxx, this contract shall be automatically cancelled without further consent or action of seller or buyer and without regard to any other cancellation provision in this contract, except for section 8b, Risk of Loss. Section 7a, Cure Period shall not apply. EM shall be immediately released to Seller/Buyer. This condition may only be modified by written, mutual agreement between the parties.
CURE NOTICE (INVALID CURE NOTICE): Response: Send to Title Company, other agent.
Cure notice is not valid. Seller/Buyer is not in breach. No additional items were incorporated into the contract, therefore no other items convey with the property. Seller/Buyer is in compliance with the contract. If seller/buyer does not close as scheduled, seller will demand the earnest money/pursue all legal alternatives/sue for specific performance/initiate legal proceedings.
The pre closing walk thru/Cure Notice has been delivered and received by the seller. Seller's response is as follows:
As a courtesy, the seller left the lawn equipment, Paint, tiles, and laminate flooring for the buyer. No additional items were incorporated into the contract, therefor no other items convey with the property. Seller is in compliance with the contract. If buyer does not close as scheduled, seller will demand the earnest money.
CURE NOTICE: Invalid cancellation by buyer on BINSR: “See lines 268-272 of the purchase contract; Buyers reasons for cancellation are not acceptable per the BINSR requirements.”
CURE Notice: DAYS: Q: Is a CURE Notice 3 business days? Or just 3 days? A: Three calendar days. If you cure for failure to close escrow, and the last day of the cure period falls on a weekend or holiday, the cure will be extended until the next business day since the title co would be closed on those days (See line's 24-25 of the pc).