Many folks in the general public think Realtors just show homes and cash checks.
Showing homes is the fun part of helping home buyers, unfortunately, it’s not the only part. The other parts can be… er, less fun. In fact, representing home buyers can be incredibly complex.
I was thinking about this because on Tuesday I went to the Industry Partners Conference where Realtors, escrow officers and lenders get together to discuss recent “challenges” in real estate sales transactions. The educational conference largely consists of a room full of round table discussions of problems that have actually occurred in Arizona real estate transactions.
I wanted to show you an example but it took me awhile to find one simple enough to explain here. Most of the case studies are mind-numbingly complex.
The Buyer offers his contract to the REO bank. The Bank insists that their ” Counter Offer” be signed by the Buyer and be made a part of the Contract. In the REO ” Counter Offer” there is a provision that states,
” By signing this addendum, the Buyer has conducted all inspections and accepts the property in ‘as is’ condition”.
The Buyer deposits their $1,000 earnest money into escrow.
The Buyer then orders their inspection of the property and during the inspection, discovers that the roof needs to be repaired or replaced. The Buyer now wants to cancel the contract based on the inspection.
Can the Buyer cancel and receive a refund of the $1,000 earnest money?
The Buyer can certainly cancel the contract, but is then at jeopardy relative to the earnest money.
- The Buyer will probably forfeit their earnest money because by signing the REO counter offer they have agreed that they have already completed all of their inspections.
- The Buyer will be subject to any other remedies available to the Seller (which could include that Seller might sue the Buyer for specific performance). In this marketplace, however, this is not a typical tactic of the Seller.
Every single REO contract needs to be read carefully because each REO bank would have its own provisions so there is no ” standard” REO contract.
Got that? There’s no “standard” REO addendum. Each one has to be studied carefully by you and your Realtor so you can make well informed decisions.
I bet many people don’t understand the ramifications of what they are signing and end up sadder but wiser.
FYI – If everyone had a Realtor as good as Heather Barr there wouldn’t be any sadder but wiser home buyers.