Too Much Information on a contract can create a nightmare for you and your clients. when trying to obtain loan approval. As I have mentioned before, things are different in real estate land today.
An example of this is the California Association of REALTORS® Seller Property Questionnaire Disclosure.
Underwriters (the person who reviews the loan package the buyer has submitted to the bank) are catching this when it's included in the contract, then requesting to see a copy. If they see any red flags on the disclosure, they'll make it a condition (an item that needs to be repaired/replaced, etc. prior to close OR prior to loan approval).
But if it is NOT negotiated in the contract, then the Underwriter will usually not ask for it!
Another example is the termite report.
If a termite report is negotiated into the contract or is being paid through escrow, many Underwriters will ask for a copy of the report then make a condition that repairs be completed prior to close or docs even though it's an "As Is" sale.
However, if the termite report is NOT negotiated in the contract, the underwriter most likely will never ask for a copy of the report!
The bank certainly has a right to add these two items as conditions for loan approval or close. And the buyer and seller have a right to complete the disclosure and termite inspection even though it's not necessarily specified in the contract.
Be aware of additional terms you add to a contract that may create red flags to the bank and prepare your client for added conditions that may come up for loan approval.
Always check first with the buyer's loan officer to make sure you are creating a clean (no red flags!) contract to submit for loan approval
And the cat and mouse game continues....
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