Why?- If Buyer provides written objections to Seller, Buyer and Seller shall have seven calendar days after Seller's receipt of Buyer's Objections (the "Response Period") in which to agree in writting upon the manner of resolving Buyer's objections.
Except as provided in Section 10.2, Seller may, but shall not be required to, resole Buyer's objections. If Buyer and Seller have not agreed in writting upon the manner of resolving Buyer's objections, Buyer may cancel this Contract by proving written notice to Seller no later than three calendar days after expiration of the Response Period.
A mejore problem arises when the agents alloq a contract to be written where these dates actually extend beyound the settlement deadline. That is why it is better to have Inspection Dealine at least 20 days before Settlement.
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Marina Vialtsina
Showing posts with label Buyer. Show all posts
Showing posts with label Buyer. Show all posts
Monday, May 26, 2008
Tuesday, May 20, 2008
What is 10.2?
What is 10.2? 10.2 is a section of Real Estate Purchase Agreement, which specifically talks about 5 items sellers warrant to buyer:
1. broom clean and free of debris property
2. heating, cooling, electrical, plumbing and sprinkler systems and fixtures, appliances and fireplaces will be in working condition
3. roof and foundation shall be free of leaks known to seller
4. private well or septic tank servicing the property should have correct permits
5. property, improvements, including landscaping, will be in the same general condition as they were on the date of acceptance
Sometimes, Sellers concern than after the inspection, buyer will use "written objection" period of time as a renegotiation period. While it might be true, and I almost strong suggest to work reasonable things out, seller must be aware what items he/she must to repair, and what items are not up for negotiation.
On the date seller deliveres physical possession to the buyer, those 5 items should be completed. And, they are not up for discussion.
Let's review short scenario, seller and buyer under contract, and after the inspection, buyer requires seller to change the roof because it is an old one. Does he have to do that? As long as this roof does not leak, no, he does need to do that.
1. broom clean and free of debris property
2. heating, cooling, electrical, plumbing and sprinkler systems and fixtures, appliances and fireplaces will be in working condition
3. roof and foundation shall be free of leaks known to seller
4. private well or septic tank servicing the property should have correct permits
5. property, improvements, including landscaping, will be in the same general condition as they were on the date of acceptance
Sometimes, Sellers concern than after the inspection, buyer will use "written objection" period of time as a renegotiation period. While it might be true, and I almost strong suggest to work reasonable things out, seller must be aware what items he/she must to repair, and what items are not up for negotiation.
On the date seller deliveres physical possession to the buyer, those 5 items should be completed. And, they are not up for discussion.
Let's review short scenario, seller and buyer under contract, and after the inspection, buyer requires seller to change the roof because it is an old one. Does he have to do that? As long as this roof does not leak, no, he does need to do that.
Wednesday, May 7, 2008
Agency Disclosure
Going back to Real Estate Purchase Contract. Today I will cover Agency.
Agency Disclosure is mandatory, and this item often gets agents in trouble.
1. Agent should not write any offers prior to written agreement with his/her client. It avoids any confusion who Agent can or cannot represent and how much he/she will be paid. As a seller, you can choose if you are fine with Agent potentially representing both you-Seller and Buyer (limited representation/limited agency). Even though some may consider this limited representation is a conflict of interests, it is legal in Utah.
a. Here is why agents cannot list the property without an agreement, and cannot write an offer without one.
2. Limited Agency is prohibited if
a. If Agent is or one of the owner of the house Buyers are interested to buy (In other words, agents can sell their own houses as listing agents, but cannot represent both themselves and buyers)
b. Same applies if agent is officer, director, partner, member, employee or stockholder in the property buyer is interested in.
So let's make it clear:
Q and A:
A. Can Agents sell a property they have some or all ownership in? Yes
B. Can that same Agent also act as a Buyer's Agent? No
C. Can Agent represent buyer even though he/she represent seller/has a listing? Yes, only if seller and buyer authorized him/her to do so.
D. Can a listing agent purchase a property that they have listed or are trying to obtain listing? Most likely not.
Even though limited agency is legal in Utah. In some situations the law recognizes that it is not impossible, but difficult to fulfill fiduciary duties to both seller and buyers.
Agency is the possibly the most important aspect of what agents do. And, Agent has following duties to his/her client:
Loyaalty
Obedience
Full Disclosure
Confidentiality
Reasonable care and diligence
Holding Safe and accounting for all money or property entrusted to the Agent
The question which has never been aswered yet is does Agent have some type of ongoing agency relationship? In other words, let's say agent had a listing, but now he/she doesn't; however, now agent has a buyer for his/her previous listing... Potentially, even though it is not clearly asnwered by law situation, it is risky situation because as a Agent, you have knowledge of very private information such as previous offers, for instance...
Agency Disclosure is mandatory, and this item often gets agents in trouble.
1. Agent should not write any offers prior to written agreement with his/her client. It avoids any confusion who Agent can or cannot represent and how much he/she will be paid. As a seller, you can choose if you are fine with Agent potentially representing both you-Seller and Buyer (limited representation/limited agency). Even though some may consider this limited representation is a conflict of interests, it is legal in Utah.
a. Here is why agents cannot list the property without an agreement, and cannot write an offer without one.
2. Limited Agency is prohibited if
a. If Agent is or one of the owner of the house Buyers are interested to buy (In other words, agents can sell their own houses as listing agents, but cannot represent both themselves and buyers)
b. Same applies if agent is officer, director, partner, member, employee or stockholder in the property buyer is interested in.
So let's make it clear:
Q and A:
A. Can Agents sell a property they have some or all ownership in? Yes
B. Can that same Agent also act as a Buyer's Agent? No
C. Can Agent represent buyer even though he/she represent seller/has a listing? Yes, only if seller and buyer authorized him/her to do so.
D. Can a listing agent purchase a property that they have listed or are trying to obtain listing? Most likely not.
Even though limited agency is legal in Utah. In some situations the law recognizes that it is not impossible, but difficult to fulfill fiduciary duties to both seller and buyers.
Agency is the possibly the most important aspect of what agents do. And, Agent has following duties to his/her client:
Loyaalty
Obedience
Full Disclosure
Confidentiality
Reasonable care and diligence
Holding Safe and accounting for all money or property entrusted to the Agent
The question which has never been aswered yet is does Agent have some type of ongoing agency relationship? In other words, let's say agent had a listing, but now he/she doesn't; however, now agent has a buyer for his/her previous listing... Potentially, even though it is not clearly asnwered by law situation, it is risky situation because as a Agent, you have knowledge of very private information such as previous offers, for instance...
Wednesday, April 23, 2008
Mortgage Financing Contingency
If the buyer applies for mortgage, he will be contingent upon his/her financing. If you are a seller, it helps to check pre-approval and/or pre-qualification letter from the lender before offer accpetance, but buyer will still reserve the right to be contigent upon financing. (finacing clause)
First of all, what is the difference between Pre-Approval vs. Pre-Qualification?
Usually, pre-approval simply means interview with a lender, and lender's confirmation how much you can afford depends on information you provide to the bank.
Pre-qualification is based not only on interview, but also your credit check and few more paperwork you were required to bring: W2s, employment history, etc.
In other words, pre-aulification is more than pre-approval.
Second of all, while above mentioned financing clause is good at taking care of the most situations, if I represent buyer and if the byer is shopping around for loan, I suggest to add disclosure something like this " This ofer is subject to the Buyer's approval of the terms and conditions of any mortgage financing that the Buyer may apply for".
As a seller, you should clearify this statement and establis some time of boundaries. Not to have it as a deal breaker, it is better to buyers to know exactly what loan they are qualifing for before writting an offer.
Tomorrow, I will discuss what does it mean to apply for the loan, and what is procedure if the loan is denied?
First of all, what is the difference between Pre-Approval vs. Pre-Qualification?
Usually, pre-approval simply means interview with a lender, and lender's confirmation how much you can afford depends on information you provide to the bank.
Pre-qualification is based not only on interview, but also your credit check and few more paperwork you were required to bring: W2s, employment history, etc.
In other words, pre-aulification is more than pre-approval.
Second of all, while above mentioned financing clause is good at taking care of the most situations, if I represent buyer and if the byer is shopping around for loan, I suggest to add disclosure something like this " This ofer is subject to the Buyer's approval of the terms and conditions of any mortgage financing that the Buyer may apply for".
As a seller, you should clearify this statement and establis some time of boundaries. Not to have it as a deal breaker, it is better to buyers to know exactly what loan they are qualifing for before writting an offer.
Tomorrow, I will discuss what does it mean to apply for the loan, and what is procedure if the loan is denied?
Tuesday, April 22, 2008
Closing Costs
Especially, as a first time buyer or seller, people do make mistake budgeting for the house they can afford, forgetting about closing costs. Today I would like to touch base what closing costs are and what usually seller and buyer responsible for.
Depending on how strong the market is for sellers and buyers and how well your negotiation goes on, you can ask pther party to pay for your closing costs. Keep in mind though, it may no be always beneficial, so please call me if you consider doing that...
Please keep in mind that numbers below are only estimates, and they may depend on your agent and Title Company. I recommend my clients no matter if it is Buyer or Seller to call around and choose the best Title Company out there.
What Closing Costs Seller usually responsible for and why?
As a seller, you final paperwork should look something like this:
Contract sales price: let's say $275,000
minus closing costs-------about ??
minus paying off the mortgage(s) you have
minus (adjusting items you have not paid for)....let say you are closing on June 04, county taxes are due once a year in Utah, so final amount will get adjusted, in other words you would be responsible for county taxes from January 01-June 04 (assuming June 04 is recording date)
All of this is pretty easy except what is closing costs?
1. Seller is responsible for commissions, seller would pay for Buyer's and Seller's Agent. This number should not be a mistary because if you are a seller, you should already have agent agreement which discussed how much it is...
2. That Title company would charge settlement or closing fee, usually about $75-100
3. Title Company would also charge document preparation free: about $25-35
4. Seller is responsible for Owner's Coverage. In other words, Title company at seller's expense buys insurance which covers Lender and Buyer/Future Owner covers from any undiscovered liens, claims, house upgrades with no city permit, etc. It is not an option item for seller, it is a requirement for seller to purchase. If you house costs $275,000, you are looking at about $900
5. and, lastly recording fee- to make sure you would be removed as a owner of this property-$20.00
What Closing Costs Buyer usually responsible for and why?
As a buyer, you final paperwork should look something like this:
Let's say you contract price is the same: $275,000
minus closing costs-------about ?? about $8,000
__________+
so the gross amount due from Borrower/Buyer is now $283,000
Then amounts paid by or in behalf of the buyer will be deducted:
such items as Deposit or Earnest Money (so here, you would see that your deposit did not get lost it simply became your downpayment)
principle amount of your loan
2nd loan if you have one
again, because county taxes are paid only once a year, and you did not live in the house from January 1 to June 4-you will receive this prorated amount as a discount
This is how Title Company calculates how much many you would need to bring...
Again, All of this is pretty easy except what is closing costs, what is $8,000 in this case:
1.Loan Origination Fee, this amount is traditionally 1% of you loan amount and is payable to your Mortgage Company. It should not be a mistary, and you should know up front how much moeny your mortgage person is planning to charge.
2. Whoever is providing you mortgage may also charge such items as tax fee, processing fee, underwritting fee, flood certification fee, appraisal review fee, assignment fee, courier fee...please get a good understand what and why these fees are charged...Appraisal and Inspection Fees, if you did no pay them yet, will be charged here
3. Now, let's sy again you are closing/recording on 6/04. Your first payment will not be due most likely until 7/01. So, your interest rate proration will be added to you, in othr words, based on your interest rate, it is calculated that it is about $37 a day, so you will be charge about $980, from 6/05-7/01
4. Harzardous Home Insurance: I recommend you shop around or ask your existing car insurance for discount if you do both car and huse with them. Your Home Insurance will be added here, about $650, let's say
5. Then the lender may request some reserve to have money at all times for such things as 2 months of hazard insurance at all times, some months of county property taxes, mortgage insurance, etc.
6. Now, title charges: Settlement/Closing fee $125, document preparation $35
7. If you are a cash buyer, you would not be resposible for the next, highest number: Lender's Coverage. If you borrow money, you are required to buy this Title insurance which is described above.
8. Wire and Courier Fee to Title Company
9. Recording fee- to make sure you are certified as a new owner of the property
As a side note to remember, most of thi fees are the same if you refinance the house, so please remember to do the refinancing only if it is beneficial.
Depending on how strong the market is for sellers and buyers and how well your negotiation goes on, you can ask pther party to pay for your closing costs. Keep in mind though, it may no be always beneficial, so please call me if you consider doing that...
Please keep in mind that numbers below are only estimates, and they may depend on your agent and Title Company. I recommend my clients no matter if it is Buyer or Seller to call around and choose the best Title Company out there.
What Closing Costs Seller usually responsible for and why?
As a seller, you final paperwork should look something like this:
Contract sales price: let's say $275,000
minus closing costs-------about ??
minus paying off the mortgage(s) you have
minus (adjusting items you have not paid for)....let say you are closing on June 04, county taxes are due once a year in Utah, so final amount will get adjusted, in other words you would be responsible for county taxes from January 01-June 04 (assuming June 04 is recording date)
All of this is pretty easy except what is closing costs?
1. Seller is responsible for commissions, seller would pay for Buyer's and Seller's Agent. This number should not be a mistary because if you are a seller, you should already have agent agreement which discussed how much it is...
2. That Title company would charge settlement or closing fee, usually about $75-100
3. Title Company would also charge document preparation free: about $25-35
4. Seller is responsible for Owner's Coverage. In other words, Title company at seller's expense buys insurance which covers Lender and Buyer/Future Owner covers from any undiscovered liens, claims, house upgrades with no city permit, etc. It is not an option item for seller, it is a requirement for seller to purchase. If you house costs $275,000, you are looking at about $900
5. and, lastly recording fee- to make sure you would be removed as a owner of this property-$20.00
What Closing Costs Buyer usually responsible for and why?
As a buyer, you final paperwork should look something like this:
Let's say you contract price is the same: $275,000
minus closing costs-------about ?? about $8,000
__________+
so the gross amount due from Borrower/Buyer is now $283,000
Then amounts paid by or in behalf of the buyer will be deducted:
such items as Deposit or Earnest Money (so here, you would see that your deposit did not get lost it simply became your downpayment)
principle amount of your loan
2nd loan if you have one
again, because county taxes are paid only once a year, and you did not live in the house from January 1 to June 4-you will receive this prorated amount as a discount
This is how Title Company calculates how much many you would need to bring...
Again, All of this is pretty easy except what is closing costs, what is $8,000 in this case:
1.Loan Origination Fee, this amount is traditionally 1% of you loan amount and is payable to your Mortgage Company. It should not be a mistary, and you should know up front how much moeny your mortgage person is planning to charge.
2. Whoever is providing you mortgage may also charge such items as tax fee, processing fee, underwritting fee, flood certification fee, appraisal review fee, assignment fee, courier fee...please get a good understand what and why these fees are charged...Appraisal and Inspection Fees, if you did no pay them yet, will be charged here
3. Now, let's sy again you are closing/recording on 6/04. Your first payment will not be due most likely until 7/01. So, your interest rate proration will be added to you, in othr words, based on your interest rate, it is calculated that it is about $37 a day, so you will be charge about $980, from 6/05-7/01
4. Harzardous Home Insurance: I recommend you shop around or ask your existing car insurance for discount if you do both car and huse with them. Your Home Insurance will be added here, about $650, let's say
5. Then the lender may request some reserve to have money at all times for such things as 2 months of hazard insurance at all times, some months of county property taxes, mortgage insurance, etc.
6. Now, title charges: Settlement/Closing fee $125, document preparation $35
7. If you are a cash buyer, you would not be resposible for the next, highest number: Lender's Coverage. If you borrow money, you are required to buy this Title insurance which is described above.
8. Wire and Courier Fee to Title Company
9. Recording fee- to make sure you are certified as a new owner of the property
As a side note to remember, most of thi fees are the same if you refinance the house, so please remember to do the refinancing only if it is beneficial.
Monday, April 14, 2008
The REPC _Real Estate Purchase Contract
Most problems and arguments arise because how the purchase contract is written and interpretted. Lately, I have been studying a lot to see what possibly laws suits can and did arise in the past, how local state laws interprete the REPC, and feel that I am ready to share my experience with you...If you ever decide purchase or sell the property, please consider this notes.
Real Estate Purchase Contract (REPC) is the stand form purcahse contract that is approved by the Utah Real Estate Commission and the office of the Utah Attorney General. Even though all Realtors are required to use it, individual Purchaser or Sellers can use whatever they want.
The next few days I will explain what every paragraph of REPC mean...
Here are the topics I will cover:
Offer vs. Contract.
1.Earnest Money (EM)
a. the required amount
b. when earnest moeny is deposited and where?
c. what if the EM deposited wth Title company?
d. What if EM check is returned as "NSF"
2. Included Items
a. Items which expencted to stay with a house.
b. Exluded Items
c. What if advertising (including MLS) items to stay are different from Purchase Agreement
3. Water Rights (Rights vs. Shares)
4. Purchase Price
a. Agreed Sellig Price and Method of Payment
b. What you have to pay attention to as a Buyer or Seller?
c. EM+Loan+Balance in Case=Offering Price
5. The right or obligation to do appraisal depends on Financing Condition
6. Mortgage Financing Contingency
a. What Seller or Buyer have to pay attention to?
b. Buyer's Duty
c. Seller's Rights
d. Procedure if Loan Application is denied
7. Rule about date plus three days
8. Appraisal Condition
9. Settlement vs. Closing and Possession
10. Waiver vs. Cancellation
11. When te house is closed? And, when Buyers becomes a new Owner?
a. procedes of new loan
b. record of closing documents
c. "Collected and Clear funds"
d. four calendar days
12. Confirmation of Agency
a. Written Agreement
b. Limited Agency
c. Who Realtor can and cannot represent
d. Realtor's duty to his/her clients
13. The benefit and requiremen of Title Insuranve
14. What is Seller's Disclosures:
a. Non-Occupant
b. what is "As-Is"
c. What becomes with Tenants if the house is being sold?
15. Realtors are not Inspectors
a. What do you need to become an inspector?
b. Buyers' right to cancel based on inspection or object
c. What is the difference between "As-Is" and sale that modifies section 10.2?
d. How to object properly
e. How long does the Seller have to repond? What does the seller must or might do?
16. What must Seller disclose?
a. Resource vs. Answer
b. Sex Offerder
c. Horror Stories and Haunted House
d. Stigmatized Property
e. Failure to disclose not a bsis for liability
f. Can you ever disclose too much?
17. Additional Term of the Agreement
18. Standards of Practice
19. What is addendum?
20. Home Warranty
21. Walk-through Inspection
22. Changes during Transaction
23. Authority of Singners...Whose signature should be on REPC?
24. Other Possible situations to cancel the contract
25. Dispute, Default, is there 3 day right to cancel the agreement?
26. What is Abogation?
27. Time is of the essence
28. When is your offer is accepted?
29. Contract Deadlines?
30. Offer and time for Acceptance?
Real Estate Purchase Contract (REPC) is the stand form purcahse contract that is approved by the Utah Real Estate Commission and the office of the Utah Attorney General. Even though all Realtors are required to use it, individual Purchaser or Sellers can use whatever they want.
The next few days I will explain what every paragraph of REPC mean...
Here are the topics I will cover:
Offer vs. Contract.
1.Earnest Money (EM)
a. the required amount
b. when earnest moeny is deposited and where?
c. what if the EM deposited wth Title company?
d. What if EM check is returned as "NSF"
2. Included Items
a. Items which expencted to stay with a house.
b. Exluded Items
c. What if advertising (including MLS) items to stay are different from Purchase Agreement
3. Water Rights (Rights vs. Shares)
4. Purchase Price
a. Agreed Sellig Price and Method of Payment
b. What you have to pay attention to as a Buyer or Seller?
c. EM+Loan+Balance in Case=Offering Price
5. The right or obligation to do appraisal depends on Financing Condition
6. Mortgage Financing Contingency
a. What Seller or Buyer have to pay attention to?
b. Buyer's Duty
c. Seller's Rights
d. Procedure if Loan Application is denied
7. Rule about date plus three days
8. Appraisal Condition
9. Settlement vs. Closing and Possession
10. Waiver vs. Cancellation
11. When te house is closed? And, when Buyers becomes a new Owner?
a. procedes of new loan
b. record of closing documents
c. "Collected and Clear funds"
d. four calendar days
12. Confirmation of Agency
a. Written Agreement
b. Limited Agency
c. Who Realtor can and cannot represent
d. Realtor's duty to his/her clients
13. The benefit and requiremen of Title Insuranve
14. What is Seller's Disclosures:
a. Non-Occupant
b. what is "As-Is"
c. What becomes with Tenants if the house is being sold?
15. Realtors are not Inspectors
a. What do you need to become an inspector?
b. Buyers' right to cancel based on inspection or object
c. What is the difference between "As-Is" and sale that modifies section 10.2?
d. How to object properly
e. How long does the Seller have to repond? What does the seller must or might do?
16. What must Seller disclose?
a. Resource vs. Answer
b. Sex Offerder
c. Horror Stories and Haunted House
d. Stigmatized Property
e. Failure to disclose not a bsis for liability
f. Can you ever disclose too much?
17. Additional Term of the Agreement
18. Standards of Practice
19. What is addendum?
20. Home Warranty
21. Walk-through Inspection
22. Changes during Transaction
23. Authority of Singners...Whose signature should be on REPC?
24. Other Possible situations to cancel the contract
25. Dispute, Default, is there 3 day right to cancel the agreement?
26. What is Abogation?
27. Time is of the essence
28. When is your offer is accepted?
29. Contract Deadlines?
30. Offer and time for Acceptance?
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