Who sees your Inspections? Why we keep the lender out of the deal!

  Here in the greatest state of California, we use CAR Zip Forms for almost ALL of our transactions.  Our good attorneys at CAR try and keep us all out of trouble by giving us the most up to date contracts to use for our transactions. One of our goals is keeping the lender out of the deal. The strategy is to not tweak them and force them to get involved IN the deal. Want a lender breathing down your neck?  Referring specifically to reports the buyer may wish to order during your due diligence period will do the trick. The clause in our CAR forms for inspections pretty much covers every issue known to mankind. So there is no need to single out a report thus setting off alarm bells lenders hear loud and clear. Stating, “Buyer to have 17 days in which to order and pay for Well report, water purity test and pest report” will compel the lender to say, “let’s see those when they are done.”  Remember, we don’t need another set of eye-balls telling us how to conduct our business. Writing this invites lender participation. Lenders get their time when the appraisal comes into play. If an appraiser calls out an issue with the property then you’ll HAVE to get those reports to satisfy the issue raised.  But by using the standard clause in the contract we can get ALL of the reports the buyer wishes without blatantly stating WHICH ones.

  We’ve had lenders request items, when checked, that refer to harmless disclosure. So they are watching. I’m also careful about who sees these reports. I don’t know if I want certain reports circulating through the real estate community and coming to the attention of a studios appraiser. This is NOT about full disclosure but WHO gets the disclosures—the parties TO the transaction. We also, as the clause states below, receive any and all reports completed BY the Buyer during their due diligence inspections. This is the upside of a deal that falls through- the seller now has full reports. This gives the Seller the option to repair items on the reports which may have spooked the buyer and sent them packing. You’ll now have to disclose these reports to future buyers but knowing what conditions are inherent with your property makes negotiating vastly more pleasant.  

  Each state is different and here in California this differs from Southern to Northern California. Then its from MLS area to MLS area. How is it in your area?