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WHAT ARE THE BUYERS SIGNING?

By
Real Estate Broker/Owner with Toth Real Estate Group, Inc 0691554

I believe the number one reason a client works with a particular agent is because they trust him/her, or should they? We are not attorneys, but there are simple dates and terms we should make sure are part of a contract.

Let's take for example the Short Sale Addendum to Purchase and Sale Contract from the Florida Association of Realtors. Paragraph 1-  Has the approval deadline and either party may cancel the Contract. However, it does not state that the Deposit needs to be returned to Buyer.

I recently received a Short Sale Addendum for my clients to sign prepared by an Attorney who is also the Closing Agent. Please note this was the only addendum to the contract and it also stated that this Addendum shall prevail if there was a conflict between this Addendum, the contract or any other addendum.  As I read the Addendum I noticed that the following important terms were missing:  

(1) Approval Deadline for Lender, without this deadline we have a contract that is open indefinitely pending for a certain contingency to clear.  If the buyers get tired of waiting for the Lender's approval how do you get out of this contract? Remember it is a contract and there is a contingency for Lender's approval.

(2) Time Periods: Due to the complexity of the Short Sale Transaction and the time limits, the addendum should have a Time Period (EFFECTIVE DATE OF THE CONTRACT). In any short sale addendum we should have this time period start when the Lender approves the Short Sale, otherwise by the time the Lender approves the Short Sale your inspection period, commitment letter, and closing date would have elapsed.

When I spoke to the Listing Agent regarding the addendum he said that that was the addendum this Attorney had been using till now and had no issues with it.

My question to him was- So when does this contract become effective?

He said- When the Lender approves it

I said- we both agree on that, so where in the contract or addendum does it state that?

He said- I will speak to the attorney.

Many important dates and addendums are not taking seriously by many agents. They just want the deal signed and the house sold. I want that to, but done the right way.

Comments(12)

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Ronnie Margolis
KW Kauai - Kapaa, HI
Kauai Realtor - CDPE, ABR, RA - On Top of the Aloh

We use a short sale addendum company wide that states that all contract dates become effective after approval from the lender so there is reasonable timeline once the darn bank makes up its mind.

Oct 10, 2008 05:10 PM
Ronnie Margolis
KW Kauai - Kapaa, HI
Kauai Realtor - CDPE, ABR, RA - On Top of the Aloh

We use a short sale addendum company wide that states that all contract dates become effective after approval from the lender so there is reasonable timeline once the darn bank makes up its mind.

Oct 10, 2008 05:10 PM
Yoana Toth
Toth Real Estate Group, Inc - Sunny Isles, FL
P.A.

Thanks for your comment Ronnie,

I hear you !!!! These banks don't care. Our Short Sale Addendum from the Florida Association of Realtors has that effective date also, the problem is when all these Attorneys and Short Sale Specialists come up with their own Short Sale Addendum.

Thanks again,

Oct 11, 2008 09:47 AM
Carol Lee
Dilbeck Real Estate - Oak Park, CA
Realtor - Agoura, Oak Park, Westlake CA Homes

The California Association of Realtors has a short sale addendum, and we usually put that the time contingencies begin the day after we receive written approval from the bank.  The time frames all begin upons receiving that written approval, so the check does not go into escrow until after bank approval as well.

Worse than the short sale addendum is the bank addendum that buyers of REO's sign- now that is scary!

 

Oct 11, 2008 05:47 PM
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
850-476-4494 - Pensacola, Pace or Gulf Breeze, Fl.

We need to realize also that we are the Real Estate professional here o an attorney unless tey sspecifically practise real estate law. I cannot tell you but at least 12 times that i can remember that an attorney has been wrong on a contract that they were advising me on. I always back it up with our lawyer service that is free to Florida agents. Did you know that we as Realtors are held tp higher standards legally and professionally than are attorney's.

Example: I have had numerous attorney's tell me that whoever pays for the cost gets to choose who does that service and I have had them tell me the buyer gets to choose regardless of who is paying. Both are wrong all things are negotiable in Florida.

 

 

Oct 12, 2008 01:36 AM
Gene Allen
Fathom Realty - Cary, NC
Realty Consultant for Cary Real Estate

Never seen a short sale addendumb but I am sure some companies around here have one.  If anyone wants to email me one I would appreciate it.

Oct 13, 2008 10:01 AM
Sergio Rebollo Jr.
Real Estate TeamMates - Miami, FL

Good post Yoana!!!  Have you been with Blue Mar for long?  Reconoci tu nombre...I thought from Keyes.  Good luck with your short sales and keeping agents punctual with dates.  Here in Miami there are many that still have a tough time wih dates even after the FAR 9 improvements.

Oct 13, 2008 06:14 PM
Yoana Toth
Toth Real Estate Group, Inc - Sunny Isles, FL
P.A.

Carol- That is the way it should be, but I'm afraid that is not what some buyers are signing. REO Addendum? Wow, that is another post on its own. I had one recently that Addendum A stated property was being Sold As-Is with rights to inspection etc....Addendum B stated the Buyers had already inspected the property and were purchasing the property As-Is. I contacted the Listing agent and she said that the Bank was requiring both signed, and I told her they contradicted each other. So, I sent both and in Addendum B, I added that the Buyer had 10 days inspection period.

Charles- I agree with you!!!! This is what we specialize in, and some of us really understand what we are doing. That has also happened to me plenty of times, and I do question the attorneys. Some love to work with me because I pick their brains....It is fun... Yes, everything in a contract is negotiable.

Gene- Thanks for your comment, I will send you a Short Sale Addendum shortly.

Sergio- Hello Sergio, your name is also very familiar to me. I have been with Blue Mar for 4 years, and before that with Coldwell Banker in Miami Lakes. Keeping up with dates in a contract is vital to our business. We are the Real Estate professionals!!!!!    

Thank you all for your Comments !!!

       

      

Oct 14, 2008 02:02 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Yoana - The situation that is coming up with many REO properties is that listing agents convey "verbal" acceptance of an offer, but it takes several days to get an actual fully executed paper contract signed by seller back.  In the interim you have written that the sale is subject to certain inspections within a certain amount of days.  The listing agent tells you that the clock is ticking with the verbal acceptance.  That often places the buyer in the position of putting out hundreds of dollars in inspections without anything in their hands that they have an actual sale.  It can be very uncomfortable.  Are we ready to return to a more traditional market - or what?

Oct 21, 2008 02:10 PM
Yoana Toth
Toth Real Estate Group, Inc - Sunny Isles, FL
P.A.

Myrl,

I know, it is crazy !!!! The only thing we can do is explain to the Buyers what is going on with regards to terms and dates on these contracts. DISCLOSE, DISCLOSE, DISCLOSE... It is up to them to make the decision of moving forward. What concerns me the most is the agents that do not explain the process to the Buyers and just make them sign that extra addendum or a contract without explaining important terms.

I HAVE BEEN VERY MUCH READY to go back to normal... However, it will take some time.

Thanks for your comment!!!!!

      

Oct 21, 2008 02:20 PM
Sergio Rebollo Jr.
Real Estate TeamMates - Miami, FL

Yoana...local high school or college?  Or just lots of e-mail flyers??

Oct 21, 2008 02:28 PM
Gene Allen
Fathom Realty - Cary, NC
Realty Consultant for Cary Real Estate

Yoana, I can't remember if I sent you a thank you for the email you sent so I will do it here.  Thanks.

Oct 24, 2008 11:12 AM
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