Untitled Document

To get the New Year off to a good start, I would like to share with you some brief tips and observations. Some you may have heard before, and some may seem like just plain common sense. They are all, however, important. Reviewing them may prove useful to you in your day-to-day business.

Calendar important transaction dates. Purchase and Sale Agreements have several significant dates. These include contingencies that must be completed or waived, ordering and review of title reports performance of inspections, application for financing, vacation of the premises, and of course, the closing date. Remind your clients as these dates approach. Document your reminder with a quick note to your file. Clients appreciate reminders, and you look organized and professional.
Carefully review your paperwork. Are all blanks filled in? Are surplus or inapplicable provisions marked out and initialed? Do the Addendums work together with the Purchase and Sale Agreement, or do they contradict each other? Have both husband and wife signed all documents? Do you have a complete set of all Addenda? Reviewing the documents you’ve prepared for your clients can be deathly dull, but is absolutely essential to the transaction – and your professional reputation. Sloppy or incomplete work is an invitation to disaster. If you spot a problem, talk to your clients and your broker immediately. Work with them to fix the glitch.
Remember the difference between a Purchase and Sale agreement and Real Estate Contract. These two terms are not interchangeable. Using them that way marks you out as ill-informed and also causes unnecessary confusion. A Purchase and Sale Agreement (or Earnest Money Agreement) is a contract to make a contract. In basic terms, it sets forth the agreement between the parties on how they will buy and sell a specific piece of property. A real estate contact is a type of financing document. In it, a Seller agrees to finance the transaction directly with the Buyer. No banks, mortgage companies, or other lenders are involved.
Keep calm in a crisis. Wheeler’s first rule of real estate sales is that, “Contained within each Purchase and Sale transaction is at least one ‘heart-stopping’ glitch. It will strike when you least expect it, and when you can least afford it.” The best agents/affiliates I have seen are those that handle the “heart-stopper” calmly, coolly, and professionally. You may be at your wits’ end with worry, or ready to explode with frustration. Instead, take calm, cool and professional action to solve the problem. The clients will appreciate your measured approach. I know of several members and affiliates whose helpful and cheery attitude in a crisis has won them a loyal following. In short, expect a crisis; be helpful and prepared when it happens.
Septic systems mean taking extra precautions. As county requirements grow ever more stringent, and as good land gets harder to obtain, septic systems become bigger potential problems. The cost of designing, permitting, and building a septic system is high. A working septic system is an essential ingredient to virtually every transaction. Consequently, be sure the system works! If you have doubts, follow up your concerns with your clients. Get copies of repair bills, or inspection reports for your own records. Have your clients review the county’s file for completeness. Visually inspect the system yourself if you have questions. It is far easier to deal with a lost sale due to septic problems, then to be sued later for misrepresentation.
Talk to the neighbors. They are a great source of information on the property,especially about drainage problems (useful if you’ve only seen the property in dry weather).
Ask questions about community wells. How many people use the system? Who maintains it? Does it comply with all governmental regulations? When was the water last tested? Does the water sharing agreement meet federal guidelines (and thus qualify properties served by the well for federal loan programs)? How much does it cost each user of the well? How are fees charged and/or assessed? When was the last fee agreement? Help your clients by making sure they have this information. Like septic systems, no home can function without water. For some reason, a community well convinces people they have all the water they need at a fixed price. That is not always the case. Tell your clients to investigate now, and save problems later.
Be sure PUD/condominium projects are FHA and VA approved. Most lenders require P.U.D./condo projects be FHA and VA approved prior to lending money on them. (Approval is also required for new home subdivisions if there is not a 2-10 warranty offered). The secondary loan market virtually requires it. For some reason, builders seem to be tardy applying for it – delaying loan approval and thus closing. Make such approval a contingency. Put a fairly short deadline on it to keep the transaction from dragging out.

I hope you find these tips and observations helpful, and I wish you a happy and productive new year.

This article contains information of general interest, and is not intended to be, nor should it be relied upon as a substitute for specific legal advice.