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October 2023 Newsletter: Assisting All Agents

Writer's picture: melissa-gilbertmelissa-gilbert




What sets us apart is attention to detail. Not only do we pay attention to the details of your contract, but we aggregate and analyze the data from hundreds of contracts. The resulting information gives us insight into market trends, which we delight in passing along to you.

 



Purchase & Sale Agreement-F201

I’m going to spend the rest of the year going back to basics and reviewing some terms in the GAR Purchase & Sale Agreement. This month I’m focusing on Repairs. Remember during 2020 and 2021 when most Buyers didn’t feel like they could ask for repairs? It’s still a Seller’s market, but today’s Buyers, who are paying top dollar and high interest rates are expecting more Sellers to do repairs.


Here is the language in the Purchase and Sale Agreement regarding repairs:


i. Repairs: All agreed upon repairs and replacements shall be performed in a good and workmanlike manner prior to Closing unless otherwise agreed to in writing by the Buyer and Seller.


Most Buyers and Sellers agree to repairs in writing using the Amendment to Address Concerns. If your Amendment doesn’t request paid receipts, photos or videos of completed items, then the Seller could argue that they aren’t required to provide them. If your Amendment doesn’t require the repairs to be completed by a specific date, then the default as stated in the Purchase and Sale Agreement is by closing. (Yes, I have experienced a situation where Sellers were still working on repairs hours prior to the closing appointment. That was a fun transaction!)


What about when a lender is involved and the underwriter wants proof that all repairs were completed prior to issuing a closing disclosure or providing clear to close? Most Sellers hire reputable companies to complete work and finalize repairs in a timely manner, even if they didn’t agree to do so in the Amendment to Address Concerns. However, to protect your Buyer and avoid any closing delays or “pants of fire” texts/emails to your co-op agents or lenders, consider negotiating a deadline for repairs to be completed and receipts/proof of completion to be provided prior to your closing date. If you want to make sure the lender has them prior to releasing the CD, then 3 business days might be your choice. I also see agents request 5 days.


Other Tips for Amendments to Address Concerns (ATAC):

  • If the ATAC references an Inspection Report, I’ve seen underwriters request a copy of it in its entirety. (Usually at the last minute for a final review for clear to close)

  • When negotiating repairs, avoid using strikethroughs when possible. I’ve seen underwriters push back as that “un-repaired item” could affect their value of the loan/property.

  • Avoid using the phrase “licensed” professional when describing the contractor you’re requesting to do the work. I’ve seen underwriters request a copy of the professional license. (Also at the last minute for final review for clear to close when said professional was out of the country)

  • If negotiating a seller credit in lieu of repairs, avoid using the language “in lieu of repairs” on the actual amendment. Some underwriters assume this could mean that they are writing a loan on a house with a huge problem that the buyer is not going to fix after closing.

  • Remember that lenders care about the value and condition of the home. Involve your loan officer while negotiating repairs or credits to make sure that you don’t accidentally cause a problem or a potential closing delay.

  • Prepare Buyers to schedule inspections so they happen on day 1-2 after binding. Educate them on hiring a professional inspector in your Buyer Consultation. Provide 3 Inspectors during the Showing Period. Have them schedule the Inspection once you get verbal confirmation that their offer is being accepted/signed. Protect yourself by sharing the GAR Consumer Brochures and having them call the inspection company personally to choose the inspections they want to pay for. Avoid advising them not to pay for “Add-Ons” such as sewer scopes, septic inspections, or radon tests. Allow the professional inspector to educate them and then let them decide on their own.

  • Always seek counsel from your Broker for more advice on GAR forms.


SS 332 WALK THROUGH LIST, ITEMS COMPLETED AFTER CLOSING

Notwithstanding anything contained herein to the contrary, Buyer and Seller agree that all items on the Walk Through List shall be completed by Seller in a good and workmanlike manner no later than ______________ days after the closing. This stipulation shall survive the closing.


Monday, October 9, 2023

Columbus Day


Friday, November 10, 2023

Veterans Day


Thursday, November 23, 2023

Thanksgiving


Friday, November 24, 2023

Day after Thanksgiving

(not a Federal holiday but Closing Attorneys are closed)







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