AGREEMENT FOR SALE: EQUITABLE INTEREST, PURCHASE MONEY MORTGAGE:
AGENT, CAN HOMESMART AGENT SELL AS FSBO OR BUY FOR THEMSELVES OUTSIDE OF HOMESMART? NO!
All transactions must be run through HomeSmart. They can not put on and take off their HomeSmart hat. ADRE requires a broker to review all transactions that a licensee is involved in. It being in the MLS or where he advertises it - has nothing to do with our policy. If he doesn't want to run his transactions through us - we probably are not the company for him. TM
AGENT DECIDES TO PURCHASE LISTING: 4/3/17, Andy McDonald Tucson (Plus talked with Kyle)
1) Resign Listing (Mutual Cancellation) When you are a principal in a transaction, you can’t represent the other principal. That would be a conflict of interest and would not be an arm’s length transaction. It would also create a conflict of your fiduciary duties to your client (OLD CAR)
2) Advise seller to get their own representation and to seek out a professional BPO.
“Seller acknowledges that Listing Agent has resigned the listing for Sellers property located at 123 Main Street, dated xx/xx/xxxx. Seller further acknowledges that Listing Agent intends to enter into a contract to purchase Sellers property and will represent himself/herself exclusively in this transaction. Seller acknowledges and Agrees that he/she has been strongly advised to seek out their own exclusive representation along with a Brokers Price Opinion (BPO) and any legal, tax or other professional advice regarding this transaction.”
3) Seller can then be represented or unrepresented (Declination of Representation).
AGENT MUST DISCLOSE FINANCIAL INTEREST (SELL AT A PROFIT) (Used by Kahuna invesements, Jaime Starks/Judy Van Essen)
“Buyer(Agent) intends to acquire legal, equitable title in order to Sell at a Profit.” “Seller agrees to allow xyz LLC to advertise the property and enter into a resale agreement during the escrow period. Seller acknowledges that a member of xyz LLC is licensed in the state of Arizona. Buyer waives SPDS and CLUE Report. Buyer agrees to pay all Seller’s escrow closing costs except any cost incurred to provide marketable title. Seller shall be responsible tor all unpaid taxes, utilities, liens, judgements or fines attached to the property. Close of Escrow shall be on the date stated on line #x, or earlier with written mutual agreement between the parties. Seller agrees to release Earnest Money back to the Buyer at any time that the contract is cancelled within the inspection period or if the Title Report reflects undisclosed clouds on title that inhibit the transfer of good title.”
AGENCY relationships, consumer guide http://krec.ky.gov/legal/Alternate%20Agency%20Forms/A110.pdf
AGENCY, DUAL: Do not disclose confidential information, emphasize disclosure by seller, cannot act for the benefit of one to the detriment of the other, facilitate the transaction, ASK, “What do you want me to tell them? What do you want me to ask them?
AGENCY: REAL ESTATE AGENCY DISCLOSURE AND ELECTION (ZIPFORMS)
Buyer’s Broker: A broker other than the Seller’s broker can agree with the Buyer to act as the broker for the Buyer. In these situations, the Buyer’s broker is not representing the Seller, even if the Buyer’s broker is receiving compensation for services rendered, either in full or in part, from the Seller or through the Seller’s broker:
A Buyer’s broker has the fiduciary duties of loyalty, obedience, disclosure, confidentiality, and accounting in dealings with the Buyer. Other potential Buyers represented by broker may consider, make offers on, or acquire an interest in the same or similar properties as Buyer is seeking.
Seller’s Broker: A broker under a listing agreement with the Seller acts as the broker for the Seller only:
A Seller’s broker has the fiduciary duties of loyalty, obedience, disclosure, confidentiality, and accounting in dealings with the Seller. Other potential Sellers represented by broker may list properties that are similar to the property that Seller is selling.
Regardless of who the Broker represents in the transaction, the Broker shall exercise reasonable skill and care in the performance of the Broker’s duties and shall be truthful and honest to both the Buyer and Seller and shall disclose all known facts which materially and adversely affect the consideration to be paid by any party. Pursuant to A.R.S. §32‐2156, Sellers, Lessors and Brokers are not obligated to disclose that a property is or has been: (1) the site of a natural death, suicide, homicide, or any crime classified as a felony; (2) owned or occupied by a person exposed to HIV, or diagnosed as having AIDS or any other disease not known to be transmitted through common occupancy of real estate; or (3) located in the vicinity of a sex offender. Sellers or Sellers’ representatives may not treat the existence, terms, or conditions of offers as confidential unless there is a confidentiality agreement between the parties.
ALL INCLUSIVE TRUST DEED: An All Inclusive Trust Deed (AITD) is a new deed of trust that includes the balance due on the existing note plus new funds advanced; also known as a wrap-around mortgage. A wrap-around mortgage, more-commonly known as a “wrap”, is a form of secondary financing for the purchase of real property.
ALLOWANCE: CARPET ALLOWANCE, LANDSCAPING ALLOWANCE, PAINT ALLOWANCE, ETC:
My seller would like to add a "landscape incentive" or "landscape allowance" to the listing for $2,000. Can I put this information in the property description of the listing? Does the listing paperwork need to be updated?
Yes - it can be added. But if the buyer is getting financing - it will most likely be a problem. This CREDIT would be subject to lenders approval. I would suggest reducing the price or offering seller concessions by the amount of the allowance. TM
APPRAISAL MANAGEMENT COMPANY (AMC), WHO ORDERS APPRAISAL, LENDER?
HIRING YOUR OWN APPRAISER, WHO PAYS? FEDERAL RESERVE GUIDELINES, WHAT IS SALE FALLS THROUGH?
APPRAISAL IS AN OPINION OF VALUE: If I get an appraisal of a listing prior to listing to I have to disclose the appraisal information in MLS? No, an appraisal is an opinion of value and there is no legal obligation to disclose it. See section 5b, line #201 of the purchase contract.
APPRAISER: Make sure the Appraiser has the geographical knowledge (local market expert).
APPRAISAL, ADDITIONAL APPRAISAL REQUIRED BY LENDER: “If an additional appraisal is required by the lender, and said appraisal comes in lower than agreed to sales price, buyer agrees to make up any difference required by lender.”
APPRAISAL, WHEN IS IT COMMUNICATED TO THE BUYER: In my experience, there's often no indication from a buyer's lender that an appraisal result has been communicated to the buyer. Short of calling the lender to find out if they've provided the appraisal results to the buyer, is there a way to solidify the date that starts the contingency clock for the buyer?
You're right Jon, and the answer really is no. Other than doing what you described and calling the lender, there's no definitive way for you to know that exact day. KF
APPRAISAL LOW ON VA, FHA, CONVENTIONAL LOAN, BUYER PAY DIFFERENCE (override amendatory clause):
“All parties are aware that the (LOAN TYPE) Appraised Value is $xx, and the Sales Price is $yy. Seller and Buyer Acknowledge and Agree that Buyer will pay the Purchase Contract Sales Price of $yy and that the Buyer will pay the difference required by lender of $zz at closing to meet the Contract Sales Price.”
APPRAISAL CONTINGENCY STILL VALID ON CASH TRANSACTION: “Appraisal Contingency on page x, line #x of this PC to still be valid if Buyer elects to have property appraised. If Appraisal is ordered, it is to be completed during the Inspection Period.”
APPRAISAL, LOW APPRAISAL, PAY $1000 ABOVE APPRAISED VALUE LANGUAGE “In the event that the Premises fails to appraise for the purchase price in any appraisal required by lender, buyer agrees to pay up to $1,000.00 above the appraised value, to a maximum of the purchase price on line 8.”
APPRAISAL, EXISTING LOWER APPRAISAL, BUYER AGREES TO MAKE UP THE DIFFERENCE LANGUAGE
Appraisal exists at $x. Buyer agrees to pay any difference between the sales price and the appraised value as required by the lender.
APPRAISAL, SELLER REDUCE CONCESSIONS IF CONCERNED ABOUT POSSIBLE LOW APPRAISAL LANGUAGE Seller and Buyer agree that if the home fails to appraise, any buyer requested reduction in the sales price as a result of the appraisal will be offset by a corresponding decrease in seller concessions.
APPRAISAL, BUYER MAINTAIN CONCESSIONS IF CONCERNED ABOUT POSSIBLE LOW APPRAISAL LANGUAGE Seller and Buyer agree that if the home fails to appraise, any buyer requested reduction in the sales price as a result of the appraisal will be not be offset by a corresponding decrease in seller concessions.
APPRAISAL, PRICE REDUCED DUE TO LOW APPRAISAL LANGUAGE
Sales price to be reduced to the appraised value of $x...or...Buyer and Seller agree to a reduced sales price of $x….or….Seller and Buyer hereby agree to amend the purchase price to reflect the appraised value of $x.”
APPRAISAL, EXTEND APPRAISAL CONTINGENCY PERIOD, SELLER WANTS TO CHALLENGE APPRAISAL (OR SECOND APPRAISAL)
My clients are first time buyers who do not have extra funds to bring in. The seller wants to CHALLENGE THE APPRAISAL and refuses to lower the price. I am wondering what type of paperwork I should complete to protect my clients as this will take them outside the contingency period. Thanks in advance for your help, Bob. HI Bob, I'd do an addendum (and make sure it's fully executed during the contingency period) that states:
“Buyer and Seller agree to extend the appraisal contingency time frame to allow for the appraisal to be Contested. In the event the appraisal review does not result in the appraisal amount being increased to at least the purchase price, the Buyer shall have the right to cancel the contract with a full refund of the earnest money within 48 hours of notification. If appraisal challenge is successful and appraised value comes in at or above purchase price, buyer agrees to waive appraisal contingency and proceed with this transaction”.
‘Buyer and Seller agree to extend the appraisal contingency time frame to allow for a Second Appraisal. In the event the second appraisal does not result in the appraisal amount being increased to at least the purchase price, the Buyer shall have the right to cancel the contract with a full refund of the earnest money within 48 hours of notification. If second appraisal value comes in at or above purchase price, buyer agrees to waive appraisal contingency and proceed with this transaction.” Something along those lines should suffice. KF
FHA questions: What is the proper way to notify FHA buyer 2 that a prior FHA APPRAISAL has been completed and is within the 120 day stick period? Counter offer? Addendum? Does buyer #2 have to pay for this prior appraisal? Is the seller wrong to offer FHA if they are listed above the prior FHA appraisal? (they could ask buyer to pay difference out of pocket since the buyer is going to find out). Just trying to be sure how to handle this situation. Thanks, Jeff.
Good morning. Has the FHA appraisal already been paid for by the original FHA buyer? Yes it has, the deal fell apart due to the low appraisal, seller did not want to lower price. Are you listing it at the FHA appraised value? No, higher, they are hoping a conventional or cash deal comes in.
I would counter any FHA offers stating an FHA appraisal exists at "$x" value and borrower will be required to pay "$y" in cash (if they are offering more than the FHA appraised value). That would hedge off a deal falling apart later on. Jeremy House
APPRAISAL, WHAT IF YOU FORGOT TO INCLUDE AN APPRAISAL CONTINGENCY WITH YOUR CASH OFFER? You can still cancel on Due Diligence, sect 6a, line #215, determining VALUE is included in inspection!
APPRAISAL, HOW TO CONTEST? Hi Laurie. You must convince the lender that the appraisal has incorrect or erroneous information. The lender would call for a new appraisal if they thought it was necessary and you could convince them the current appraisal is flawed. That is a very difficult thing to do unless there are obvious errors or mistakes. Call the lender and voice your concerns to them and see what they have to say, that is the beginning of that process.
APPRAISAL, RAPID VALUE APPRAISAL: Make sure your buyer approves. GET IT IN WRITING!
APPRAISAL: “Should the property fail to appraise at the sales price, buyer agrees to pay up to an additional $10K over the appraised value.”
I have a client that really-really likes this property in “Estrella Mountain” and the asking price is about $289k. The husband of my client told the wife hey maybe we should just offer up $300k to make sure we win this property. I wanted to get a brokers opinion on this because I’ve personally never had an offer this much above asking price. Is it normal, is that a little too high, or on a home in that area which is pretty desirable and under $300k goes so fast is this somewhat viewed as being acceptable? Before I have them sign and send the full offer to listing agent I definitely wanted to run this by a broker. Thanks in advance,
When you offer above asking price, you run the risk of the property not appraising.......the biggest issue if there's a loan involved.
You will need to take a close look at the comps and the amenities this property has to make sure that kind of offer makes any sense and advise your clients accordingly.
ARMS LENGTH TRANSACTION: HAFA SHORT SALE DISCLOSURE/ADDENDUM: (SEE HAFA AFFIDAVIT) If Agent is buying on his/her own behalf, they are not allowed to be paid a commission as per the terms of the HAFA Affidavit which all parties must sign.
FYI: This is not an arms length transaction due to the agent being the buyer. If the lien holder sends an arms length transaction form to sign, be sure to get it approved by a broker prior to signing. Be sure you notify the broker that the buyer is also the agent. Thank you.
Grace Hopper. It's easier to ASK forgiveness than it is to get permission. Rear Admiral Grace Murray Hopper (9 December 1906 – 1 January 1992) was a U.S. Naval officer, and an early computer programmer.
ASSIGNING CONTRACTS, Legality in Arizona http://www.creonline.com/forums/archive/index.php/t-125850.html
ASSIGNMENTS (how they work) http://www.houseflippingonline.com/contract-assignments.html
ASSIGNMENT (sample) https://www.asreb.com/2014/06/assignments-buyers-rights-purchase-agreements/
ASSIGNMENT LANGUAGE WHEN SELLING FOR A PROFIT: (MUST DISCLOSE WHEN SELLING FOR A PROFIT) “Seller and Buyer Acknowledge and Agree” OR Seller acknowledges that ____ is entering into this purchase contract for the sole purpose of obtaining legal interest in order to further market the property for sale. Buyer shall have the right to cancel this purchase contract at any time without cause and without recourse above and beyond any Earnest Money provided for on line #x.”
“Buyer(Agent) intends to acquire legal, equitable title in order to Sell at a Profit.”
“Seller agrees to allow xyz LLC to advertise the property and enter into a resale agreement during the escrow period. Seller acknowledges that a member of xyz LLC is licensed in the state of Arizona. Buyer waives SPDS and CLUE Report. Buyer agrees to pay all Seller’s escrow closing costs except any cost incurred to provide marketable title. Seller shall be responsible tor all unpaid taxes, utilities, liens, judgements or fines attached to the property. Close of Escrow shall be on the date stated on line #x, or earlier with written mutual agreement between the parties. Seller agrees to release Earnest Money back to the Buyer at any time that the contract is cancelled within the inspection period or if the Title Report reflects undisclosed clouds on title that inhibit the transfer of good title.”
AS-IS ADDENDUM: The lines in the AS IS Addendum don’t even match up with the Purchase Contract anymore FOCKER!
AUCTIONS: Does my real estate license allow me to assist a buyer with a purchase at auction and negotiate a commission or referral?
Yes you can. However chances are the auction will not allow you to be a party to the contract. You will need a separate employment agreement (Buyer Broker Employment Agreement) as the buyer will usually have to pay. On the buyer broker write in that if the buyer purchase a property at auction the buyer will pay a consultation fee of $X. Jenny.