Have you ever received an offer to purchase (Purchase Contract or Purchase Agreement) with mistakes, serious ones? Recently I had the opportunity to review such a contract one of my team members shared as a learning experience.
Given I have only been in this industry for only three years, I thought I would miss some of the mistakes. Fortunately, I as well as the other team members, discovered the serious errors and where the information conflicted with Dirt Road Standard of Practice (SOP). Note: The agent’s name, buyer’s name and any other confidential information were redacted to honor Code of Ethics confidentiality.
The Purchase Agreement had six significant errors (in bold and red).
#1 = Line 2 - No seller indicated
#2 = Line 8 - Legal description incomplete - should have gone to page 8 and provided full legal description
#3 = Line 10 - within 72 hours of acceptance - SOP for DRRE is 48 hours
#4 = Line 11 – Three (3) fundings to Escrow (Very confusing)
#5 = Line 36 – Missing Home Owner’s Association/Property Owner’s Association Addendum (HOA/POA)
#6 = Line 39 - Missing Market Condition Advisory Addendum (MCA)
#7 = Line 46 – Credit required this is Owner Will Carry, for an investor, should be contingent upon the Buyer’s credit
#8 = Line 128 is in the section about Assessments Liens. The contract indicated the buyer “prorated and assumed by Buyer. (This is a disadvantage to the Buyer. SOP for Dirt Road is for Seller to assume assessments liens.)
#9 = Line 172 - No HOA addendum attached in file received
#10= Line 261 - Buyers initials missing
#11=Line 331 – On Page 8 is where additions can be made to the contract. This contract read “Close of Escrow can occur sooner if both parties agree in writing.” DRRE’s SOP is to add “Provided Title is given 3 days notice” for early
#12=Line 413 – The contract provided less than 24 hours to respond. SOP for DRRE is usually 48 hour
#13=Bottom on Page 10 – As DRRE is a small firm, the Broker Judith Ritter initials all required documents before submission to the other party. Other Broker may initial after the fact.
As to Owner Carry or the Seller Financing Addendum, this document had four (4) serious errors (in bold and red).
#1 = Line 19 - No buyer's initials indicated
#2 = Line 26 - Interest rate is contrary to the advertised. This may be a negotiating point in a counter offer.
#3= Line 36 - No dollar amount for late payment
#4= Line 37 - No dollar amount indicated for late fees
#5=Line 50 – Credit check required
#6=Bottom of Page 2 - As DRRE is a small firm, the Broker Judith Ritter initials all required documents before submission to the other party. (SOP) Other Broker may initial after the fact.
#7=Missing the first page of the Seller Financing Addendum Non-Consumer Credit Transaction document which needs to be signed only by the Seller.
What was very disturbing is our team members, Elise Harron, shared she initially presumed this purchase contract offer was written by a novice realtor. Unfortunately, Elise discovered the buyer’s agent had almost 20 years real estate experience as a licensed real estate agent within the State of Arizona.
The other unfortunate part of this story was the reaction by this “experienced” buyer’s agent when these errors were politely called to her/his attention. Needless to say the buyer’s agent reaction was less than positive and could have been viewed as hostile. This behavior was totally against the Code of Ethics as well preparing a document filled with errors.
Weekend Wisdom is ALL real estate agents and realtors should be diligent in completing any offer to purchase with extreme accuracy. If a mistake(s) is made as we are human, the conversation should be respectful from both sides of the offer.
Graphic courtesy of Pixabay.com