Raleigh, Durham, Chapel Hill, CaryThe Triangle Area
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So this is basically a house selling for all cash money, up front, to seal the deal quickly ?
I have to assume in the specific scenario referenced in the OP involves the buyer is paying MOSTLY cash; but is financing a smaller amount that over list price.
House was listed at $350k; buyer offered $450k but is only financing $100k of it (or whatever the amount may be; this is just for example)
They then structured their offer as highlighted in the OP; and will close with a $100k loan on the property after having already paid the initial $350k in the forms of DD and EMD at time of contract.
I'd be curious to know if it was a flipper or someone buying the house to live in. That is a competitive price point in Raleigh. I'd love to know what kind of offer it takes to buy a house at $350K now.
Regardless of how addendum is drafted..... bottom line is it's a DD contract.
How "enforceable" is it when an addendum says that buyer will pay the $30k over list price that is on the contract....when the appraisal comes in $20k below list price and the buyer doesn't have $50k cash on hand to make up the difference. What are their options? The buyer can terminate which sucks for them but is their only option if the sales price isn't lowered. What is in the best interest of the seller at that point?
Appraisal addendum, regardless of wording, is a security blanket at best.
The only legitimate one I could see and am trying to get made is "buyer agrees to pay X amount over appraised value if property appraises below list price"
Ex.
Property listed for $300k; buyer offers $330k.
Addendum states "buyer agrees to pay contract price if property appraises at at least list price; if property appraises below list price; buyer agrees to pay $30k above appraised value".
Property appraises at least $300k; buyer pays $330k
Property appraises at $290k; buyer pays $320k.
That's the only scenario that is conceptually enforceable IMO. There's only so much cash that any particular buyer has.
Unless the offer is cash; in which case appraisal shortage is obviously a moot point anyways.
Attorneys giveth. Attorneys taketh away. Contracts are their thing.
LOL
I have seen contracts from Long Island from relocators. The attorneys used Sharpies to strike what they didn't like, to annotate, etc.
The words are just words. The art is in knowing what to do with them to make them mean what is desired and then to make them stick.
Last edited by MikeJaquish; 03-23-2021 at 09:42 AM..
There is a LOT of cash in the world. People just used to be more conservative with it. Difficult times make for alternative approaches.
You can pull from a retirement account, pay cash, refinance, and pay the loan back.
Or, Mom and Dad can buy with cash for you, and you can do likewise.
I don't think one could possibly identify the property on MLS or elsewhere on the internet from the information provided unless someone says, "I am the buyer or seller or an agent involved." As in, "Yup. $100,000 DD Fee. $250,000 EMD at that little loveshack at 123 Elm Street."
DD Fee and EMD are not provided in any database. On a cash deal, there is no Deed of Trust registered, even if you wanted to look back.
The closing attorney who generated the post has 4 or 5 offices and multiple staff attorneys doing high volumes of closings. Nick uses them. I use them from time to time. Lots of volume going through those offices.
$350,000 is near median price in many local markets.
And, he may well have fudged the numbers to increase anonymity. I would have.
Would it matter if the story was "$355,000 Contract. $99,000 DD Fee. $256,000 EMD?"
I think not. Illustrating the dynamic, not the specific transaction.
I would think "1/3 DD Fee, 2/3 E$ - yes, 100% of purchase price before closing" provides the shock value intended/needed.
The whole DD fee ... some transparency would be helpful, but I also understand it is a confidential part of the contract (as is E$ of course).
I would think "1/3 DD Fee, 2/3 E$ - yes, 100% of purchase price before closing" provides the shock value intended/needed.
The whole DD fee ... some transparency would be helpful, but I also understand it is a confidential part of the contract (as is E$ of course).
Eh.
Less impressive without context. A $100,000 condo cash deal? Not really a big deal.
$350,000? Lower than median in several areas.
Make it a $750,000 house? More impressive for most folks.
The scariest part is the protocol wherein the DD Fee goes directly into the sellers' pockets. So, the seller goes on a weekend binge and burns the money, and then breaches contract... That $100,000 is very possibly unrecoverable for the buyer, particularly if there is little equity in the property.
I'd be curious to know if it was a flipper or someone buying the house to live in. That is a competitive price point in Raleigh. I'd love to know what kind of offer it takes to buy a house at $350K now.
No way a flipper would tie up that much cash on a single house. They need the capital to actually flip the house. Many function in buy, rehab, sell, repeat, OR, buy, rehab, rent, refi, repeat. I can't imagine putting in 350K into a house while you could get a couple to rehab and sell.
Eh.
Less impressive without context. A $100,000 condo cash deal? Not really a big deal.
$350,000? Lower than median in several areas.
Make it a $750,000 house? More impressive for most folks.
The scariest part is the protocol wherein the DD Fee goes directly into the sellers' pockets. So, the seller goes on a weekend binge and burns the money, and then breaches contract... That $100,000 is very possibly unrecoverable for the buyer, particularly if there is little equity in the property.
Exactly, $350,000 in cash is not really that crazy an idea, but $350,000 to get to contract is insane as is $100,000 in nonrefundable DD. There is no way in hell I would pay $100,000 DD! Glad I am not buying.
Eh.
Less impressive without context. A $100,000 condo cash deal? Not really a big deal.
$350,000? Lower than median in several areas.
Make it a $750,000 house? More impressive for most folks.
The scariest part is the protocol wherein the DD Fee goes directly into the sellers' pockets. So, the seller goes on a weekend binge and burns the money, and then breaches contract... That $100,000 is very possibly unrecoverable for the buyer, particularly if there is little equity in the property.
Now that's ****ed up. My realtor told us to move quickly and have solid DD money. She suggested 5K-7K and I was pretty pissed about it after reading the contract. I was like so basically it's non refundable if the house foundation is ****, and I can't walk out without losing 7K. I really never lived anywhere with this stupid DD money, and I found the whole thing to be very stressful. Now I read these threads where people putting down 20K-30K in DD money and I get second hand stress for the buyers. Two houses sold in my neighborhood for like 40K-50K over the asking price and I'm like wtf is happening out there. And, then the OP posts some cocky realtor/broker bragging about his nut clients, and I get triple stressed for the buyers. Honestly, who can sustain this level of stress. All I can say I am thankful I am not a buyer right now. I'd just get a van and go Vanlife for a while. F**ck home-ownership.
Eh.
Less impressive without context. A $100,000 condo cash deal? Not really a big deal.
$350,000? Lower than median in several areas.
Make it a $750,000 house? More impressive for most folks.
The scariest part is the protocol wherein the DD Fee goes directly into the sellers' pockets. So, the seller goes on a weekend binge and burns the money, and then breaches contract... That $100,000 is very possibly unrecoverable for the buyer, particularly if there is little equity in the property.
"For about the median home price now" or "a house in the 300's" or whatnot. The big shops would do us all a favor if they kept track of DD (and E$ I suppose) and put out a quick monthly update..."this month, the median DD was 3% and the average was 5%" or somesuch.
Now that's ****ed up. My realtor told us to move quickly and have solid DD money. She suggested 5K-7K and I was pretty pissed about it after reading the contract. I was like so basically it's non refundable if the house foundation is ****, and I can't walk out without losing 7K. I really never lived anywhere with this stupid DD money, and I found the whole thing to be very stressful. Now I read these threads where people putting down 20K-30K in DD money and I get second hand stress for the buyers. Two houses sold in my neighborhood for like 40K-50K over the asking price and I'm like wtf is happening out there. And, then the OP posts some cocky realtor/broker bragging about his nut clients, and I get triple stressed for the buyers. Honestly, who can sustain this level of stress. All I can say I am thankful I am not a buyer right now. I'd just get a van and go Vanlife for a while. F**ck home-ownership.
Asking price has no relevance in real estate transactions.
That has been the case forever and a day.
You use listing price as a search parameter to deliver properties, but you don't focus on it when buying or selling.
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