Contracts and contingencies??

Question

Hi,
I am a newbie here. I am reading in a lot of these post to include contingencies in ur contracts so if the deal doesnt go through you are not liable. I would like some info on these contracts and contingencies because i haven't a clue about them. examples would be helpful. also would it be in my best interest to talk to a real estate attorney to learn about these and if so would i have to pay him/her for their time?
Thanks,
Jonathan

Alan Brymer · Answer

If I understand the question correctly, it was about contingencies if you do not follow through with buying a house you have under contract.  I use Lou Brown's contract to purchase.  With it, I usually do not make any contingencies except for if tere are major repairs needed that are not obvious at that time.  Other than that, I don't use any, and rely on athis escape clause if ever needed, which is pretty rare.  The contract has an entire paragraph on the subject but all I'd really need it to say is that:

Should Buyer default on this agreement, Seller shall keep Buyer's earnest money deposit as full compensation for damages.  Buyer shall be free from any further liability.

If you did call an attorney, though, he could answer it in 2 minutes.  What I like to do to get free legal advice is to hammer an attorney with questions whenever you see one at a closing.  This is a good time for verbal Q&A, not for reviewing contracts.

Another good time is when you are looking for an attorney to begin with.  Most will give you a free introductory session where you ask them about their experience in real estate law, and also take the time to ask questions that have been on your mind and make your decision based on how astute they are and hoq quickly and eaisly they answer your questions.

Best of luck!

Alan Brymer

Jonathan Reizovic · Answer

Could someone please clarify I understand closing costs are different, but I'm trying to get an estimate for every $100k about how much is the closing cost?
Thank you,
Jonathan

Brandon Schlichter · Answer

Just depends on your lender. Some people use 2% , some use 3% as the rule of thumb , but as a Real Estate agent , i've never seen any rule of thumb work because most of the time the seller is willing to pay for some of the costs. Then the bank may decide they want certain inspections, personally right now i'm running about 7.5% nessisary to do close on a house with 5% of that being down. As i said earlier ,ask a lender what the closing costs will be , some of them may be static (IE $500 for appraisal , $400 for processing , $300 for underwriting) So in that case its not a %.

Brandon Schlichter · Answer

Now , this is all comming from a agent in Central Ohio. Nothing i say should be taken as legal advice.

"If" I were you , i'd find the local board of Realtor purchase contract and either go over it with an agent or attourney. I live in central ohio ,and most counties have different contracts with different contingencies and rules. IE in my county we use the Columbus form , but sometimes i run into a southern Ohio form (SVAR form). Both are different on who pays for what , in Columbus the seller pays for title insurance , but that's not the case elsewhere. Get a standardized board form ,and then go from there. Our board had many , many attourneys go over the form and make sure it was great. Lots of buyer protection , more so than any single attourneys could make (I had heard that dozens of attourneys were in on the new CBR Contract).

Closing costs vary from area to area ,and lender to lender , make sure you get a Good Faith Estimate on what the lender estimates their closing costs to be , along with points , processing ect.

I'm a agent and soon to be investor ,and its amazing to see how little i have to put into these investments, yet a good portion of it goes down (Right now i'm at about 4k per investment).

Jonathan Reizovic · Answer

What are the average closing costs? Whether a percentage of the sale price or just a flat fee?
Thanks again,
Jonathan

Jonathan Reizovic · Answer

Is this a regular contract, and the contingency would be that the seller pays? Again I don't no anything about contracts or contingencies.
Thanks again,
Jonathan

Lynn Z · Answer

most real estate companies have  contracts that do stipulate that the seller pays for the heating and air inspection and termite inspection and the buyer selects companies to use.   This is negotiable of course.  Sometimes a seller's agent doesn't like the one company the buyer selected and will agree to any other names except the one named.  This is worked out.

If the contract falls through, however, whoever called the termite company and the heating and air company winds up paying the bill regardless of the language of the contract.  You don't want your vendor thinking you're a deadbeat and throw them in an argument  with a stranger/broker over $150-$200.  Smart listing agents know this and will manipulate the call so that you as the buyer or your agent makes the appointment.

This contract change in our area clearly favors the seller. Lowers his closing costs at the same time. More frightening is the requirement that the lender/underwriter produce a committment letter 5 days before closing or suffer the consequence.  The last 4 closings I was involved with the loan package was late and the underwriters slow with lots of last minute changes.  Both of these items should be changed in your favor as a buyer by scratching through what is reasonable and negotiating it out on your own terms.   Hate to see brokers/chains change the way business has been conducted for years.

Lynn Z · Answer

I think you should read a current contract at a leading real estate brokers office and ask them to explain their standard language.  My realtor this week who is a member of a large chain real estate office was excited that their standard contract language has changed to require that the buyer's lender give a commiittment letter within 5 days of closing or possibly be sued for contract performance.

As we all know, closings many times depend on bizarre requests by "underwriters" and the loan officer waits like everyone else for the package to be delivered to the closing attorney.  I believe realtors will take a harder road with buyers to avoid so many of them canceling contracts because of the market.  Closing attorneys are not familiar with the changes in these contracts.  Brokers are.  You need to have one go over that contract and then change anything you can't live with such as the above (something out of your control).  Also,  this contract places the payment of termite and heating and air letters at the buyer's feet even though it's always been written that the seller will pay (buyer's selects company) in our state.