Can 'Nail Holes" in Sheetrock Be Reason For Termination?

We have all had this happen ...Walk through with buyers the day before closing (after seller has removed all their belongings)...and the buyer freaks about nail holes in Sheetrock where photos or art were previously hanging. What are their options? It depends.... -Eddie Brown-

 

 

Condition of Property at Closing

Release Date: 8/11/2015

QUESTION:  I represent sellers who have their home under contract. The buyers conducted a walk-through, discovered several nail holes in the walls where my clients' pictures were hung, and are now demanding that my clients fill those holes, paint the walls and then professionally clean the entire house. The buyers have said that if my clients refuse to do those things, they would be in breach of the Contract and the buyers would have no obligation to complete their purchase. Are they correct?

ANSWER:  The buyers are not correct.

NCAR's Offer to Purchase and Contract (form 2-T) contains very specific provisions regarding when buyers have the right to terminate a Contract. For example, Paragraph 4 (f) gives buyers the right to terminate a Contract for any reason or no reason during the Due Diligence Period.
The Contract also specifies a few circumstances that enable buyers to terminate the Contract after the Due Diligence Period ends without themselves being in breach of the Contract. The seller’s failure to materially comply with any of the seller’s obligations under Paragraph 8 of the contract is one such circumstance (see Paragraph 8(n) and the warning at the end of Paragraph 4).  Another such circumstance is the non-satisfaction of the contingency set forth in paragraph 11 of the Contract.
Paragraph 11 states that the buyer's obligation to complete the transaction is contingent on the property being "in substantially the same or better condition at Closing as on the date of (the) offer, reasonable wear and tear excepted." The word "substantially" is important because it means that the buyers' performance of the contract will only be excused if the change in the condition of the property is material. While determining whether a change in condition is substantial or material may be difficult in some cases, it is clear that nail holes in the walls would not be considered a substantial or material change under any circumstances. If the buyers refuse to close because of nail holes, they will likely be found to be in breach of the Contract.
Form 2-T does not require sellers to either professionally clean the property or freshly paint the walls prior to Settlement. Therefore, unless the buyers have extracted a separate written agreement from the sellers to clean or paint the property, they have no legal basis to condition their performance on either action.

NCAR provides articles on legal topics as a member service.  They are general statements of applicable legal and ethical principles for member education only.  They do not constitute legal advice.  If you or a client requires legal advice, the services of a private attorney should be sought.  Always consult your broker-in-charge when faced with a question relating to the practice of real estate brokerage.
© Copyright  2015. North Carolina Association of REALTORS®, Inc. All rights reserved. No reproduction of any part may be made without the prior written consent of the copyright holder. Any unauthorized reproduction, use, disclosure or distribution is strictly prohibited.

Buyer Terminates Post Due Diligence and Wants E$ Refund.... Wait... What?

  Say it ain't so Eddie! 

There are a few circumstance which could lead to a buyer getting earnest money back post due diligence... Make sure you are aware of them... Eddie B

 

Buyer’s right to EMD refund after end of Due Diligence Period

Release Date: 08-24-2015

QUESTION: I had one of my listings under contract using the Offer to Purchase and Contract (form 2-T), but I’ve been notified by the buyer agent that the buyers have decided they just don’t want the house after all.  The Due Diligence Period is over but the buyers are demanding a refund of their Earnest Money Deposit.  When I told the buyer agent that the buyers will lose their EMD because they terminated after the end of the Due Diligence Period, he challenged me to point out where it says that in the Contract. 

The Contract clearly states that the buyer gets a refund of the EMD if he or she terminates prior to the end of the Due Diligence Period.  But where does it say that if the buyer terminates after the end of the Due Diligence Period, the buyer loses the EMD?

ANSWER: If a buyer terminates the contract prior to the end of the Due Diligence Period, the buyer is always entitled to a refund of the EMD.  On the other hand, although the buyer will generally lose the EMD if he or she terminates after the end of the Due Diligence Period, that is not always the case. 

For example, if the seller is unable to deliver good title to the property, the buyer clearly is entitled to a refund of the EMD notwithstanding the fact that the Due Diligence Period may be over.  Because it depends on the circumstances, there is no “black and white” statement in the Contract that the buyer loses the EMD if he or she terminates after the end of the Due Diligence Period.

The answer to the challenge posed to you by the buyer agent is contained in the definition of “Earnest Money Deposit” in paragraph 1(e) of the Contract, where it states that if the buyer breaches the Contract, the EMD is paid to the seller.  In your situation, the buyers are likely in breach of contract because they’ve decided to terminate after the end of the Due Diligence Period without a “good” reason, meaning a reason that would permit them to terminate the contract, such as the seller’s failure to comply with one of the seller’s obligations under paragraph 8 or the non-fulfillment of one of the conditions set forth in paragraphs 11 and 12.



NCAR provides articles on legal topics as a member service.  They are general statements of applicable legal and ethical principles for member education only.  They do not constitute legal advice.  If you or a client requires legal advice, the services of a private attorney should be sought.  Always consult your broker-in-charge when faced with a question relating to the practice of real estate brokerage.
© Copyright  2015. North Carolina Association of REALTORS®, Inc. All rights reserved. No reproduction of any part may be made without the prior written consent of the copyright holder. Any unauthorized reproduction, use, disclosure or distribution is strictly prohibited.

Can a Buyer "Switch" Loan Types after Contract is Signed?

Have you ever had a buyer want to switch to a different type of loan mid-stream?  Usually there is a good reason for doing so...but what if it costs the seller for them to make the switch, or it delays the closing???? What are the sellers options if this occurs?

Release Date: 8/18/2015
QUESTION: If buyers state in an Offer to Purchase and Contract that they are getting a conventional loan, can they switch to a VA loan after the contract is signed by all parties?  Would the contract need to be amended?  If the seller does not allow a VA appraiser into their home because they do not want to agree to the buyers switching to a VA loan, are they in breach of contract?
ANSWER: The loan representation in paragraph 5(a) of the Contract is a statement of the buyer’s intent with respect to financing at the time they make their offer.  If the buyers were acting in good faith and intended to obtain a conventional loan at the time they submitted their offer, it would not be a breach of contract for them to seek a different type of financing after the offer becomes a contract, whether or not the seller agrees.  However, if the buyer seeks VA financing, the buyer’s lender may well require the contract to be amended to add the FHA/VA Financing Addendum (form 2A4-T) to the contract, and the seller would be under no obligation to agree to such an amendment.  If the buyers are able to proceed with VA financing, though, the seller’s refusal to allow a VA appraiser on the property could be characterized as a breach of contract since the Contract permits the buyers during the Due Diligence Period “to conduct all desired tests, appraisals, investigations, examinations and inspections of the Property as Buyer deems appropriate” (see paragraph 4(b)).


NCAR provides articles on legal topics as a member service.  They are general statements of applicable legal and ethical principles for member education only.  They do not constitute legal advice.  If you or a client requires legal advice, the services of a private attorney should be sought.  Always consult your broker-in-charge when faced with a question relating to the practice of real estate brokerage.
© Copyright  2015. North Carolina Association of REALTORS®, Inc. All rights reserved. No reproduction of any part may be made without the prior written consent of the copyright holder. Any unauthorized reproduction, use, disclosure or distribution is strictly prohibited.

Finish 2015 Strong!

With only four and a half months left in 2015 some of you may have some catching up to do to reach your goals...
Here are a few tips to re-charge and re-fuel your business engine.

 
Tip One:
Manage Your Energy... Steer clear of distractions which drain your energy... FEAR, WORRY, DRAMA, INDECISION, POOR HEALTH. Fuel your engine with energy givers which boost your performance.

Tip Two:
Re-Write You Goals...Envision your ideal business and life for the rest of the year, and write down where you want to go. This becomes your written plan for the rest of the year.


Tip Three:
Schedule Your Week... Start with the "non-negotiables" ...these are your priorities which can't or shouldn't be moved or deleted from your calendar. (Lead Generation should be one of those items.

Tip Four:
Re-Qualify Your Database...Scrub your database and focus your marketing and energy on the people who are most likely to send you referrals




Tip Five: 
Invest In Yourself... YOU are your biggest business asset...What are you doing to increase your value? Invest in Training and/or hire a Business Coach...Talk to mentors and learn to work smarter and earn more!

Bonus Tip:
Use Proven Dialogues...and ask for the referral!
"Who do you know right now who may be thinking of buying or selling a home?"

Gear up for a strong finish for 2015!
Go to www.ICU-Coaching.com for info on one-on-one coaching.

How to Generate Quality Prospects… and Convert Them to Qualified Clients!

Your ability to find qualified prospects is the lifeblood of your real estate business. Coupled with converting those prospects to qualified clients… lead generation is probably the most profitable task you can factor into your schedule.   It’s not an understatement to repeat how strong lead generation skills mean the difference between success and failure in the real estate market — between the years 2006 and 2010 the NAR membership ranks decreased by over 200,000 REALTORS…how did the ones who survived make it?  I have listed 3 topics below that may help you to understand. A solid lead generation program (to include a data base management system) can help you increase your ability to create a steady stream of clients who convert into satisfied customers. Think of lead generation as a planned and continuous cycle rather than a single event. 1. Data Mine Your Book of Business- (BoB) Keeping in touch with past clients is essential to a strong lead generation program. ·        Are your past clients going through a life change which will affect their housing situation? ·        Are any of them looking to downsize? ·        Have they welcomed a new addition to their family? ·        Reach out to let them know you’re available to help with their housing needs. Stay in touch by creating hand written notes with simple calls to action like, “How much is your home worth?” While we’re often bombarded with online messaging, personalize hand written mail can help you stand out to consumers.   Receiving one or two referrals from these notes could cover your marketing costs while closely connecting you with new clients. 2. Farm Your BOB Whether your Data Base is based on geography or your relationships, it’s important to identify your ideal “farm.”   It is important to establish brand identity with-in your data base and develop professional trust based relationships.   For someone to refer you they must know you…like you…and trust you… make them trust you using #3 …read on.   3. Offer Useful “Items of Value” Create a customer for life by providing valuable insight on the local housing market.   ·        Once a month send an informational piece to your database…something that’s valuable to them and related to real estate and their property values.   ·        Buffini and Company is a  great resource for monthly IOV’s to send to your data base Book of Business (BoB)  www.buffiniandcompany.com   ·        When meeting with prospective clients, even rookie agents will be able to tell the sellers how much their home is worth…. Plus today’s consumers have access to many online tools to help determine their properties estimated value. It’s crucial to show them how a true real estate professional can provide pinpoint pricing, a detailed marketing plan and suggestions on how to get the highest price in the shortest amount of time using knowledge gained through past experience. ·        Take it a step further and provide your clients with a printed professional market analysis including the most recent market activity reports for their area. Keep in mind the key things sellers are interested in: #1 the value of their home, #2 how long will it take to sell, and #3 what are you going to do to get it sold.. Tailor your marketing to these 3 points and you’ll capture the seller’s attention by providing them with the information they want to know.

Final Thoughts: Top-producing agents know they must have a strong branding presence in their local market to consistently achieve results. Although the market is constantly changing, the need for a consistent lead generation program remains a necessity. By following these steps, you can brand yourself as the real estate professional in your market area, giving you the opportunity to demonstrate your skills to potential buyers and sellers.

 

Eddie Brown ©2015

www.ICU-Coaching.com