I attended another CE class last weekend and we always talk about something that we should or shouldn't be doing. That is why this business is continually changing and you need to stay on top of things.
The one item that keeps coming up is the "repair limit" in the inspection and repair portion of the Arkansas real estate contracts. I have dealt with many contracts that have a high amount in this field and the buyer (with or without the assistance of their agent) feel they will write everything up and just have the seller give them this credit at closing. This is NOT allowed! Most secondary market loans will not allow the closing agent to put a credit due to buyer for repairs on the HUD-1 closing statement. In some cases, the seller will write a check to the buyer for the repairs - this also is not allowed - it is a concession and has to be accounted for. We have even tried to get the seller to pay the buyers closing cost in the amount of that repair limit - this also is not allowed.
The only solution that I can think of is to actually do the repairs! It should only be written on an Inspection & Repairs Addendum if the buyer actually wants the seller to make that repair. In other words, if this particular repair is not completed, will you still buy this home? If we can all agree that when we use this addendum, we are really wanting these repairs done, should eliminate any confusions later on. If there is a list of items that you want fixed, you need to number them in the order that you want them repaired so you don't use all of the repair limit on an item that is not that important.
Another way I am handling this is to put ZERO dollars in the repair limit. This will allow you to do your inspection but if you find ANYTHING wrong, you don't have to go through with the deal or you can renegotiate the contract.
I am looking for ideas, what do you think?
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