Failure to Notify Listing Agent or Seller when an Offer has been Submitted:

What good is submitting an offer if you fail to notify the Listing Agent or Seller that it was sent? Simply sending an offer does not guarantee it will be received. Common issues include using the wrong email address, landing in junk/spam folders, or getting stuck in cyber space due to file size. After submitting an offer, the Buyer or Buyer’s Agent should verify with the appropriate parties that it has been received. Time is of the essence. Do not send an offer at 10 PM and expect a response by 6 AM – that is disrespectful, rude and reeks of desperation. While the Buyer may think they are playing hardball to avoid multiple offers, the Seller is more likely to see it as an attempt to prevent them from having time to vet the Buyer, verify qualifications with the lender, and have the offer professionally review. Many Sellers are investors and work traditional business house. Therefore, a Buyer should show respect and, at minimum, leave offers open through the end of the next business day. If a Buyer is truly concerned about multiple offers, they should write the offer to incorporate appraisal gap language, escalation clauses, and/or a non-refundable earnest money deposit to sweeten the pot, so to speak.

Invalid, Outdated or Vague Lender Financing Letters:

Pre-approval letters should be current, dated, signed by the lender, and confirm the lender is licensed to lend in the state where the property is located. We encountered a situation where a Seller received a backup offer for $10,000 more than the current contract price and asked me to find a loophole to terminate the existing contract. The contract was well-written, and the Buyer Agent, a seasoned industry veteran, had ensured all documents and inspections were completed on time. However, upon reviewing the documents signed by the loan officer and conducting additional research via the state licensing board, we discovered that the loan officer who signed the pre-approval letter was not licensed in Ohio and was covering for another loan officer on vacation. The purchase agreement included specific language requiring certain lender-signed documents, which are invalid if signed by an unlicensed loan officer. While some may view it as unfair to terminate the contract over such an oversight, my fiduciary duty was to represent the Seller’s best interests, and the Seller had the right to seize the opportunity to increase their bottom line. Most pre-approval letters are ambiguous, unsigned, and not worth the paper they are printed on. In a multiple offer situation, offers with incomplete pre-approval letters are likely to be disregarded as they lack credibility and may be problematic. It is crucial for the Seller to request a signed copy, as fraudulent pre-approval letters are more common than one might think. The pre-approval letter should state that the Buyer is qualified at or above list price, indicate whether the Buyer needs to sell another property or clear other debt-to-income deficiencies before closing, and verify the Buyer’s credit report has been pulled and reviewed. Additional concerns include asset, employment, and income verification. The pre-approval letter should specify the type of financing the Buyer is using. If the Buyer has chosen a VA loan, they should have their DD-214 readily available, or additional time may need to be included in the purchase agreement to allow the Buyer to obtain the form. The pre-approval letter should also state of the Buyer needs Seller assistance with pre-paids and closing costs, and if so, how much. The Seller should not hesitate to call the lender to further vet the Buyer’s qualification.

Verification of Funds:

Surprisingly, we have encountered hundreds of cash offers without any verification of funds! Cash offers should always include verification of funds such as a letter signed by a banker, a verifiable asset management company, or a recent account statement. For security purposes, it is acceptable to black out all but the last four numbers of the account numbers. This verification should be recent. When in doubt, Sellers should contact the asset management company to verify authenticity, as PDF files and screenshots can easily be altered with today’s technology.

Concessions:

Sellers should carefully evaluate and negotiate any concessions. Lack of clarity often results in the underwriter requesting the contract be amended to accurately reflect where the money is going. Ambiguous language is common, but simple phrasing such as “Seller to contribute 2% of the sales price toward Buyer Pre-paids and Closing Costs” is usually sufficient. However, if the Buyer wishes to facilitate an interest rate buyer-down, the lender may require additional verbiage to ensure full disclosure, clarifying whether it is permanent or temporary. It is crucial for Sellers to conduct their own research, as it is common practice for Buyer Agents to over-inflate the amount needed, even if the Buyer has substantial savings available. This often results in the Seller bearing the brunt of the costs while the Buyer expends little to none of their own money. Certain loan products have limits on what the Seller can contribute, and if the amount is exceeded, the money will revert to the Seller. However, most often, the lender will find a way to utilize every penny to further their bottom line.

Contingencies:

• EVERYTHING IS NEGOTIABLE

• An appraisal contingency can be accepted, waived, or appraisal gap language can be incorporated to ensure the Buyer will either cover the entirety of the difference between appraised value and the contract price, or a portion thereof.

• Dates delineated in the contract must be adhered to; otherwise, the Buyer or Seller may be in a position to terminate the contract accordingly.

• Financing terms may vary by program, whether Conventional, FHA or VA, and may incorporate additional requirements such as down payment assistance programs, grant money, and more. Government-backed programs often require the appraiser to perform a cursory inspection to ensure it meets the appropriate guidelines. Often, a Buyer will waive an inspection knowing the appraiser will call out certain items, requiring said items to be fixed prior to closing. The Seller should have a basic understanding of lending practices to avoid being caught off guard. It is prudent for Sellers to reach out to the lender to clarify terms prior to accepting an offer.

• Home Warranty plans vary in price and can be paid by the Buyer, Seller, split between the parties, or waived.

• Inspections: We often see offers with the Buyer asking for 14 days to facilitate inspection. Why should the Seller want to tie up the property for 14 days in a market where the turnaround time is often 7 days at most? The Seller should negotiate the inspection timeline accordingly.

• Home sale contingencies and kite tails: Is there a home sale contingency? If yes, is the property on the market? If not, when will it be on the market? Does that Buyer have a home sale contingency? Kite tails are complicated. A kite tail indicator is when a home sale has another home sale contingency, and each home sale contingency is a knot in the kite tail. It is not uncommon to see 5 or more knots in a kite tail, and if one knot comes loose, the entire chain falls apart. Sellers would be best served to negotiate language into a home sale contingency stating the Buyer will not accept any offers on their home with home sale contingency language incorporated therein. The Seller should also incorporate a 24 – 48 hour escape clause if agreeing to a home sale contingency.

• What conveys: Attached items convey with the property unless otherwise delineated in the purchase agreement. Even if chattel (unattached items) are specifically listed in the MLS as conveying, the MLS also incorporates language stating the information contained therein is deemed reliable but not guaranteed. It is imperative if the Seller does NOT want something to convey, it is specifically delineated in the purchase agreement. Conversely, if the Buyer wants something to convey, the Buyer should specifically negotiate the item into the agreement itself. Clarification is key to ensuring a smooth and successful closing.

Contract Timelines:

Buyers and Sellers must understand that timelines are critical, as time is of the essence. Buyers must conduct their due diligence to ensure that if they write an offer with a 15-day close incorporating a loan, their lender can accommodate the timeline. Otherwise, the Buyer may spend hundred of dollars on an appraisal and inspection only to find their contract rendered null and void due to their failure to perform. This would allow the Seller to move forward with another Buyer. There have been numerous occasions where a Buyer failed to adhere to timelines, leading me to negotiate a non-refundable upfront fee (often thousands of dollars) for an extension agreement in a Seller’s market with limited inventory, it is imperative that the Buyer and Buyer Agent pay attention to detail. Failing to do so may result in additional expenses and/or loss of the deal altogether.

Earnest Money:

Earnest money is offered as a sign of good faith, and most contracts allow for the return of funds to the Buyer if inspections or financing fall through. However, in a multiple offer situation, a common strategy to show determination and f=good faith is to offer a non-refundable earnest money deposit. This means the earnest money reverts to the Seller if the Buyer fails to perform for any reason, with no additional signatures (release) required. We encourage every Buyer and Seller to request that earnest monies be held by the title company as a neutral third party. There have been numerous occasions where Buyer Agents failed to facilitate the collection of the earnest money deposit in a timely fashion, resulting in the Seller terminating the contract and moving forward with another offer. While some may view this as unfair to the Buyer, the reality is that all parties must adhere to the terms outlined in the contract or risk termination.

Home Warranty:

Most purchase contracts include a field specifying the home warranty company, the amount, and who is responsible for payment. However, this section if often not properly completed. There have been numerous instances where the Buyer Agent listed the home warranty company and the policy amount but omitted who would pay for it. Prior to closing when the Buyer Agent realized their mistake, they attempted to coerce the Seller into covering the cost. Since the Seller had not agreed to pay for the policy, we refused to allow the Buyer Agent to pressure the Seller. In each case, either the Buyer paid for the home warranty, or the cost was deducted from the Buyer Brokerage proceeds at closing.

Inspections:

Caveat Emptor- Buyer Beware: Buyers need to thoroughly vet the qualification of their chosen home inspector and the inspection company from any liability or omissions. In Ohio, home inspectors are simply licensed to be “Home Inspectors,” which does not mean they are certified or licensed as electricians, HVAC experts, plumbers, roofers, structural engineers, or anything else. It is common for Buyers to conduct inspections and then ask the Seller to pay for various licensed contractors to inspect and evaluate the home inspector’s findings at the Seller’s expense. The Seller has already given the Buyer the opportunity to conduct the inspections of their choice. If the Buyer fails to hire inspectors who are licensed in each field of practice within the agreed timeline, that is their responsibility and should not be an expense incurred by the Seller. When negotiating a request to remedy, it is not uncommon for a Buyer Agent to try and coerce the Seller by stating they need to disclose all findings on the property disclosure form.

Caveat Venditor – Seller Beware: If the home inspector is not certified in any field of concern and has included language that a certain item should be evaluated by a certified or licensed professional due to their lack of qualifications, and their report has additional disclaimers relieving them of any liability for providing inaccurate information, it is inappropriate for the Buyer Agent to coerce the Seller into stating something is wrong with the property when there is no factual “qualified” evidence to support this claim. The Seller is required to disclose any information to the best of their knowledge, but this does not mean they are required to disclose the opinion of someone who has alleviated themselves from any liability for said opinion and acknowledged they lack the certification, licensure or skillset to render such a professional opinion.

Transfer, Closing and Conditions:

Often the purchase contract will specify that the property is to be left “broom clean,” which can be ambiguous. One person might interpret this to mean the home is left in good condition, while another might think it simply means the floor is swept. Once possession has been transferred, anything remaining at the property belongs to the Buyer unless specifically agreed otherwise in writing between the Buyer and Seller. All parties must adhere to the timeline, including removing all personal items property. Most purchase contracts state the property should be in the same condition as when the Buyer entered into the contract. This does not mean the Seller needs to repaint the home because pictures removed from the wall left outlines due to sunlight and aging of the paint. The Seller is not expected to patch every small picture hook hole; however, if the Seller creates a gaping hole while removing an item, they are expected to repair it before transfer. TV mounts, for example, can cause such holes. TV mounts are attached to the wall and must convey unless agreed otherwise in writing. The television itself is negotiable and does not convey unless the contract specifically states it. Best practices require complete disclosure of what will not be conveyed. The property is to transfer to the Buyer according to e terms outlined in the contract upon closing and funding. Post-closing occupancy agreements are often included in purchase contracts, modifying the date of possession. Sellers should contact all utility companies to provide a forwarding address, request final readings, and ensure all keys, remotes, accessories, and security codes are provided to the Buyer.

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