Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Deuterrdu,
Three good posts in a row.
However, the confusion seems to arise from the misconception and resignation that a Buyer, or a Seller for that matter, is compelled to use the NC Realtor/NC Bar form, when legal avenues for selling/buying property are available.
The standard Realtor forms are NOT mandated by state law. They are actually private forms provided by Realtors to Realtors as a convenience, and also as a protocol discipline. Realtors know that to step outside the provisions of the forms and to start drafting language puts us at risk of being perceived as practicing law without a license. That doesn't restrict a Buyer to the forms in any way. Legal talent abounds offering advice and services to those who seek another way.
I have absolutely no problem referring clients to legal counsel, and working with real estate attorneys when it appears clients will be more comfortable with an attorney's involvement. To make these points is just part fo the process of educating a client.
Hi Vicky. Even though the contract states that there is a contingent amount for repairs or the buyer receives their earnest money does not mean it willhappen. I tried to buy a home that we later found out had stachybotris and other issues. The cost to remediate will definitely exceed the contingency amount specified in the contract. The seller seems to think otherwise so we are spending more than the earnest money to force the seller to provide us not only a refund of our earnest money but more importantly a general release of liability. They are counter suing stating that we breached the contract. Funny thing is they blatently commited fraud on the property disclosure report so we will win. However, we will have to spend thousands in civil litigation costs to have this settled once and for all. Just because it says so doesn't mean it's quite that simple.
THIS is exactly the sort of situation that I've been dreading. Again, if the RE contract allowed the buyer to walk during the inspection period deuterdu would not be in this predicament! How was he/she suppose to know about the stachybotris until the inspection was complete.
Deuterdu, good luck with your suit. I hope it's resolved quickly for you.
If the contract had a repair contingency for $2500 and getting rid of mold or water issues was going to be $3,000, the buyer has the right to walk away. Free and clear WITH his earnest money deposit. Even if the seller will fix it, the buyer walks because the contract stipulated how much the repairs could cost. And...the seller will have to fix it anyway, or disclose it on his seller's disclosure. So, the protection is there. Vicki
i have a question about a real estate contract - i am trying to sell a house and have had it on the market for 9 months and the contract ends 12/31/08 - there is a clause in the contract that says protection period and on the blank line the agent has written in 180 days - does that mean that once the contract ends we still cannot sell the house for 180 days without paying the real estate fees?
ginnebee, you should have started a new thread so you could get more answers!! : )
anyway, the protection period typically covers anyone that saw the property while it was listed, now coming back and trying to buy it from you as a FSBO. And trying to cut out the agent. That wouldn't be right. but you are free to list your home with another agent or try to sell it yourself.
In my state, the contract greatly favors the buyer. There is a home inspection period coinciding with attorney review and buyers can and sometimes do walk away because they changed their minds or found something better.
There are financing contingenies that presume the house will appraise and the buyers will qualify.
Once under contract the home is off the market and as such, incurs a potential lost opportunity cost.
A well informed seller is aware of these risks at the time of contract. The fewer contingencies, the more certain a closing, the more negotiating power the buyer has, assuming the seller really wants/ needs to sell.
In my state, the contract greatly favors the buyer. There is a home inspection period coinciding with attorney review and buyers can and sometimes do walk away because they changed their minds or found something better.
There are financing contingenies that presume the house will appraise and the buyers will qualify.
Once under contract the home is off the market and as such, incurs a potential lost opportunity cost.
A well informed seller is aware of these risks at the time of contract. The fewer contingencies, the more certain a closing, the more negotiating power the buyer has, assuming the seller really wants/ needs to sell.
Middle-aged Mom,
One point we did not develop in this thread, from 2007, is the alternatives that are represented in the standard form, Offer to Purchase and Contract.
Most contracts are entered into under "Alternative 1," which offers the Buyers the opportunity to inspect and request repairs. And the games begin... We call it "Selling the house twice."
But we also have "Alternative 2." Alternative 2 is growing in use, and we have been told for 2 years that Alternative 1 will be eliminated. It may well happen in the next forms update, July, 2009.
Alternative 2 allows the Buyer a due diligence period, via the purchase of an Option to Buy. The "Option Fee" goes to the Seller, and is non-refundable, and the home is off the market during the due diligence period. (A smart Agent may pass the Option Check to trust, so an upside down Seller doesn't immediately cash it and then be underfunded to close. That topic will need to be addressed...)
At the end of the due diligence period during which any desired inspections are performed, the Buyer may agree to proceed, or to terminate "...for any reason or no reason at all, TIME BEING OF THE ESSENCE." This provision helps to protect any EMD, as it also states that EMD will be refunded if Buyer terminates within the provisions of that section.
How financing and appraisal contingencies will play out will be determined by the timelines written into the contract.
Both the Option Fee and the length of the due diligence period are negotiable, i.e., no set fee or period of time. I would expect that a Buyer should expect to pay about 125%-150% of PITI based on the contract price, annualized over the Option period.
The Option Fee will be credited to the Buyers' balance at closing, but again, if the transaction does not close, the Seller will keep it.
This should be interesting, as we are told this format will be the future of standardized Realtor contracts in North Carolina, possibly next summer.
I like the concept of the option period and the non refundable deposit, held in trust.
In Illinois, the buyer has a tremendous advantage over the seller because a house can be " off market" for up for 2 weeks, only to have the contract fall apart due to a combination of attorney and home inspection issues. There is no option fee.
I have taken some lumps on other threads about the trend towards pre-offer home inspections, in my area and how it favors the seller. The reality is that it takes substantial risk off the seller's back and creates a more solid negotiating platform for some buyers, in some cases, especially when increased certainty of closing is as important as price.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
