Posted On: February 8th, 2020 9:54PM
Posted On: February 8th, 2020 7:13PM
In the best of best worlds, Real Estate transactions run smoothly, no hitches, no delays. Unfortunately, that is not always the case. At times closings get delayed or, worse case scenario, terminated, particularly residential, with either the Seller or the Buyer initiating the termination.
More often than not, its the Buyer initiating. The reasons vary from unfavorable home inspection results, deal-breakers found in the covenants, Title didn't clear, property didn't appraise at or above sale price, Buyer's expected terms of financing fell through, Buyer's contingency of their own home sale fell through. There's also the unexpected death or severe illness/accident with one of the parties or a family member, job transfer/relocation fell through, etc.
I also know of a contract being terminated within a week of acceptance when the buyer (who contracted site unseen) discovered information provided by the Listing Agent was false, i.e. basement wasn't a walk-out, the square footage of living space included the 2 car garage, there was only one full bath, not 3.
The good news is that when a Real Estate contract is terminated in good faith and both parties have signed off on the earnest money release form, the Buyer can expect to receive the earnest deposit in very short order.
But what if both parties didn't sign off? What does the holder of the earnest deposit (usually a Title Company) do?
There is not a set in stone protocol across the boards for all Title/Escrow Companies with regard to the release of earnest deposits when either party has failed to sign the release. They have their own policies. Depending on whether or not recourse actions have been taken or are in progress, some hold it indefinitely until both parties agree (I came across more than one that still had funds from 7-10 years prior), some default automatically to the Buyer after several months of holding it, some to the Seller.
Whatever the case may be, you owe it to yourself to perform your due diligence and read the fine print on everything related to the property sales contract and for Sellers, that includes the Listing Agreement. Note: Some Listing Agreements have a choice of clauses regarding the earnest deposit on a terminated contract if awarded to the Seller. One is that the Realtor would get half of it, another the Seller gets the entire sum, and yet another is a fill in the blank on the amount/percent.
In speaking with a lot of Realtors I found that in many cases the Buyer forfeits the earnest deposit even if they terminated in good faith. Apparently some they don't consider it worth their time to pursue recourse. And some who do consider it worthwhile, will go to their Attorney, usually at considerable cost, and have them assist in getting it returned to them.
My advice, in addition to performing your due diligence right out the gate, is to not waive your right to recourse and if something goes awry on the contract, seek mediation as your first option to resolution. Its relatively inexpensive and has a very good record of success (about 85% of cases resolve with mediation). Note: You are also welcome to involve your attorney in the Mediation process if you so choose.
Posted On: February 8th, 2020 7:09PM
In this day and age of online selling and purchasing, there is concern over the safety and security of conducting real transactions via Amazon, Zillow, Self-Directed IRA Real Estate Investment Companies and other online sources.
More often than not, an individual seeking to purchase or sell real estate is not educated on the process and is "flying blind" so to speak.
In my professional experience, nearly one-for-one, any upset over a real estate transaction can be traced back to the client/customer not knowing and/or not understanding the procedure.
By survey the two most important qualities that clients look for in Agent representation are trust and good communication. These go hand in hand, i.e. if the Agent is not communicating when he/she should be, clients tend to get anxious as they want to be kept informed. They need reassurance that they are in good hands and that their Agent has their back.
That said, it is far better to go with a Realtor (R) than a Real Estate Agent and do the transaction in-person rather than on-line. Note: I have included a link below to a very informative article on inman.com that explains the difference between a Realtor (R) and a Real Estate Agent. Please note, any on-line transactions would not be performed by a Realtor(R).
Next... What about on-line vs in-person? Honestly, I think its a no-brainer. Even if I wasn't a licensed Realtor (R), I would never, ever purchase or sell a propery on-line. But, it all depends on the person and their needs and wants as well as the risks they are willing to take.
Ask yourself, "If something goes awry, am I protected?" "And if so, what is the process and is it simple or complicated?" Please note, in an in-person transaction you have near immediate access to resolution either with the Realtor (R), the Broker, Real Estate Commission, Mediation (if you didn't waive your right to mediate) and last but not least, litigation.
As for on-line, you have never met the person and are usually clueless as to where they are located, let alone who their supervisor is or how to contact him/her. Further, the on-line "agents" are not Realtors (R) , so are not bound by any codes.
All too likely they will require that you sign waivers and non-disclosure agreements, which could wind you up in a mess with no recourse.
Personally, I pride myself in being a "relational" as opposed to a "transactional" Realtor (R). Its not about the money for me, its about truly helping people. The photo at the top of this article is one of a family I helped and bonded with. I have many more photos of them and their children. Its the relationships in my profession that bring joy to my life. The transaction simply made the introduction.
In ending, whatever route you decide to take, I strongly advise you seek legal counsel as needed and meanwhile do not sign anything that you don't understand, let alone anything that would waive your rights to recourse or free speech.
Posted On: February 8th, 2020 7:06PM
In the years I have been a Realtor, I have found more often than not, that clients, whether Buyers or Sellers, including Investors, are not familiar with the rules and the codes that Realtors must adhere to. That said, most have no idea that the Realtor fees are always negotiable. In fact, Realtors are not allowed to set fees amongst themselves in this profession. True, there is an average of what percent of the sale is paid to the Realtor, but it is not a set in stone rate. Also, a Realtor can even be paid a flat rate instead of a percentage!
The rules and codes that Realtors are obligated to abide by are designed to protect the clients' interests and this very much includes the rule that Realtors can't set fees amongst themselves. So, beware, if one is told otherwise, i.e. "the fee is not negotiable", one may want to walk away and look elsewhere for representation.
Being uneducated, clients are pretty much walking blind through the Real Estate selling and/or purchasing process, which is why one needs a competent, trust-worthy Realtor to guide them. When one finds that Realtor, one can expect that he/she will be worth whatever fee was negotiated.
But how does one select a Realtor who will be a good fit? Its really up to the client. Some want a Realtor who has many years of experience and sells an average of 100+ homes per year. Some prefer newer agents, ones who are barely selling 10+ homes per year. Reason being, they want someone who, being new, is very conscientious, also not too busy to pay attention. Some look to "Yelp" for those with 5 star-ratings and excellent reviews. Some will go with a Realtor who they know on a personal level or one who is referred to them by someone they trust.
However, many will choose one whose fee is well below the average. But please note, whatever the fee, a low one doesn't necessarily mean incompetence and desperation, nor does a high one mean beyond the beyond amazing representation.
On the other hand, a low one could result in a "you get what you pay for" and a high one impeccable service and a significantly above listing price accepted offer, closing on time or ahead of schedule.
One is fully within their rights to shop for the best fit and should do so. Above all, it is in one's best interest to select a Realtor whom one can trust and one who will be in good communication with one throughout the process. Once that is nailed down, negotiate the compensation for a win-win.
I wish you all the best in your journey.
Posted On: February 8th, 2020 7:03PM
I attended an Advanced Contracts Continuing Education Class in Denver, CO. This particular clause (below) was gone over in detail. I am sharing this as I feel it is very important for all Colorado residents and potential residents to know, especially if looking to purchase a home in Colorado.
8.4 - Special Taxing Districts. SPECIAL TAXING DISTRICTS MAY BE SUBJECT TO GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY REVENUES PRODUCED FROM ANNUAL TAX LEVIES ON THE TAXABLE PROPERTY WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN SUCH DISTRICTS MAY BE PLACED AT RISK FOR INCREASED MILL LEVIES AND TAX TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES ARISE RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE SUCH INDEBTEDNESS WITHOUT SUCH AN INCREASE IN MILL LEVIES. BUYERS SHOULD INVESTIGATE THE SPECIAL TAXING DISTRICTS IN WHICH THE PROPERTY IS LOCATED BY CONTACTING THE COUNTY TREASURER, BY REVIEWING THE CERTIFICATE OF TAXES DUE FOR THE PROPERTY AND BY OBTAINING FURTHER INFORMATION FROM THE BOARD OF COUNTY COMMISSIONERS, THE COUNTY CLERK AND RECORDER, OR THE COUNTY ASSESSOR."
I hope you find this information useful and that it helps you safely navigate through the somewhat daunting process of purchasing a home.