Due Diligence Earnest Money Contigencies Termination/ Expiration of Contract Short Sales Contract Questions Forms HUD
BROKER FREQUENTLY ASKED QUESTIONS Due Diligence Earnest Money Contingencies Termination/Expiration of Contract Short Sale Offers Frequently asked Contract Questions Forms HUD
Due Diligence Q. When representing a buyer, how many days should be requested for Due Diligence? A. Each situation is unique, however it is customary to request between 10 and 21 days. Depending on the circumstances a buyer may need even longer. Please remember that this time frame is VERY important! Do not commit a buyer to a time frame that is too short for the necessary inspections and verifications to be completed. Be sure to allow enough time for the buyer to review all reports and make the decision to proceed or cancel the contract. Q. How do I determine the date that the due diligence period ends? A. The count begins the day after the binding agreement or acceptance date of the contract. Example: Binding agreement/acceptance date is July 10th with a 10 day due diligence period. The count begins on the 11th and the due diligence period ends on the 20th at midnight unless a different time is specified in the contract. IMPORTANT NOTE: Due diligence periods that end at midnight can be problematic and leave everyone working late after hours to resolve issues. Add a special stipulation that ends the due diligence period at 4pm on a business day. This simple change allows all parties involved to be available during normal business hours to assist in making final negotiations. Example contract verbiage GAR contract: All parties agree and acknowledge that the Due Diligence Period as referenced in Paragraph 1J will expire at 4pm on the last day of the due diligence period. Example contract verbiage RE contract: All parties agree and acknowledge that the Buyer s General Right to Terminate as referenced in Paragraph 6.1 will expire at 4pm on the last day of the right to terminate. Q. The Due diligence period ends today and a list of requested repairs has been sent to the listing agent but a response has not been received. Is my buyer still protected under the due diligence period since the request was submitted prior to the expiration? A. No. Once the due diligence period ends on the time and date specified in the contract, the buyer will no longer be able to terminate under the protection of the due diligence period. If an agreement is not made by the end of due dilligence period the home is now being purchased as is. Options: 1. Terminate the contract PRIOR to the day and time deadline in the contract. A fax verification or email read receipt is required. See Forms section for appropriate form. 2. The buyer can choose to continue with the contract and purchase the property as is. 3., PRIOR to the day and time deadline in the contract. Broker FAQ s - 2013 Solid Source Companies
Earnest Money Q. My buyer would like to terminate during due diligence. What is the process for the earnest money being returned to the buyer? A. The buyer may terminate before the end of the due diligence period by submitting the proper termination form and the agreement to disperse trust funds form to the seller. A fax verification or email read receipt dated prior to the end of the due diligence period is required. See Forms section for appropriate forms. To receive a release of funds without Broker involvement this form must be signed by both the Buyer and Seller. See Forms section for appropriate form. Q. What are the best options for earnest money holding? A. The closing attorney remains the best choice to hold earnest money. Advantages include professional dispute resolution, attorney files are not audited by GREC, and the requirement to update earnest money status is avoided. IMPORTANT to review if Solid Source is chosen as the earnest money holder: 1. Solid Source Realty GA does not hold earnest money. To simplify processing and avoid errors, only one Solid Source company holds earnest.if you prefer Broker to be the of earnest money, Solid Source Realty, Inc. is the designated company that will hold earnest money for the broker. 2. The contract must be uploaded in TMS prior to the submission of earnest money if Solid Source Realty, Inc. is the holder. This urgency is due to the holder having specific requirements outlined in the contract. The holder must know these requirements. Again, the attorney remains the best choice as holder of earnest money. Clients can submit earnest money online to Solid Source Realty, Inc. via ACH at SolidSourceEM.com! Send buyers a link to SolidSourceEM.com to simplify earnest money submission. The request will be processed within one business day and an email confirming deposit will be sent to the agent and buyer. Broker FAQ s - 2013 Solid Source Companies
Contingencies Q. How do I determine when the date on a contingency ends? A. The count begins the day after the binding agreement or acceptance date of the contract. Example: Binding agreement/acceptance date is July 10th with a 10 day contingency. The count begins on the 11th and the contingency period will end on the 20th at midnight unless a different time is specified in the contract. IMPORTANT NOTE: Contingency periods that end at midnight can be problematic and leave everyone working late after hours to resolve issues. Add a special stipulation that ends the contingency period at 4pm on a business day. This simple change allows all parties involved to be available during normal business hours to assist in making final negotiations. Example contract verbiage: All parties agree and acknowledge that Contingencies will expire at 4pm on their date of expiration. Q. When representing the buyer how many days should be requested for the finance and appraisal contingency? A. Because each loan and lender is different and certain types of loans take longer to approve, it is best to obtain the time frames needed for the finance and appraisal contingencies from the lender. These are the professionals that can give the most accurate timeframe expectations. It is important not to commit a buyer to a timeframe that cannot be met.
Termination/Expiration of Contract Q. How do I terminate a contract during the due diligence period? A. The buyer may terminate before the end of the due diligence period by a termination notice to the seller. A fax verification or email read receipt dated prior to the end of the due diligence period is required. See Forms section for appropriate form(s). Q. The closing date has passed. Does the contract automatically terminate? A. No. In Georgia, a contract does not terminate when the scheduled closing date has passed. It is still considered an active contract. To terminate a contract either the buyer or seller can terminate by notifying the other party. Only one party needs to send notification. Important Note: Notice must be made to the fax number or email as written in the contract and verification of receipt is required. It is recommended that this notice be sent by fax so that receipt of notice can be proven.
Short Sale Offers Q. Are there special stipulations that should be entered in a short sale contract? A. Yes. Unless specified otherwise with a special stipulation, the earnest money, due diligence and contingency periods begin upon the binding agreement/acceptance date of the contract. The verbiage referenced below is necessary to allow the earnest money, due diligence and contingency time frames to begin after short sale approval. There are three common special stipulations recommended for short sale contracts. 1. The Buyer will present Earnest Money to Holder within 5 banking days of written receipt of short sale approval from all lien holders. 2. Buyer s Due Diligence Period shall begin on the binding agreement date and shall continue for fifteen (15) days after the seller has delivered written notice of short sale approval to the buyer from all lien holders. 3. All contingencies referenced herein shall commence at the time buyer has received written receipt of short sale approval from all lien holders Q. Should I include the short sale exhibit as part of the contract? A. Yes. Both GAR and RE contracts include a short sale exhibit that offers the buyer a right to terminate the contract while waiting for the short sale to be approved. Please be familiar with the form to best understand and explain the buyer s rights and responsibilities in a short sale situation. See Forms section for appropriate form. Broker FAQ s - 2013 Solid Source Companies
Frequently asked Contract Questions Q. Can a Solid Source Agent represent the buyer and seller as clients in the same transaction? A. No. Solid Source does not allow dual agency. This means that an agent may not have a client relationship with both the buyer and seller. Important Note: It is possible to represent one party as a client and the other party as a customer. An agent must disclose the types of agency relationships available in accordance with BRRETA requirements. If a buyer chooses to move forward on the purchase of a home listed by the agent after agency has been disclosed, buyer must complete and sign a customer acknowledgement form. See Forms section for appropriate form. In addition to the separate agency agreement referenced above, the contract must also disclose the type of agency relationship. Check the appropriate sections of the contract specifying buyer and seller as customer or client. Q. How is the Binding Agreement Date/Acceptance Date determined? A. The Binding Agreement/Acceptance Date is reached once the contract has been accepted, without change, by all parties and the fully executed copy has been delivered back to the party who made the offer or last counter offer. Q. How and when should repairs be requested for a property? A. Send a copy of the Inspection Report with form to request repairs to the Seller s Agent during the due diligence period. See Forms section for appropriate form. Important Note: It is important to request repairs with enough time to negotiate those repairs before the due diligence period ends. Q Who is responsible for having the utilities turned on for inspections? A. The contract determines the responsible party for turning on the utilities. While the GAR Contract states the Seller is responsible. The RE contract allows a choice of either the buyer or the seller. Note: Many addendums and special stipulations used by banks and other asset management companies state that the buyer will be the responsible party. This addendum would override what is written in the contract.
Forms Please see each heading below and choose the appropriate GAR or RE form. MHS attorney, Howell Haunson, has provided an amazing resource to all Solid Source agents! He has recorded in detail how to explain each paragraph of both GAR and RE contracts to a client. It is suggested that everyone listen to these recordings at their convenience. Howell Recordings on TMS GAR Form RE Form Show a For Sale by Owner Authorization to Show Unlisted Property F3 Seller Authorization to Show Property Without a Listing Represent a buyer as a customer Agreement to Work with Buyer as a Customer Terminate a contract Unilateral Notice to Terminate (Part 1 of 2) Earnest money release Mutual Agreement to Disburse Trust Funds (Part 2 of 2) RE 158 F15 Customer Acknowledgement RE 159 F83 F83 Notice to Withdraw or Terminate (Part 1 of 2) Agreement to Disburse Trust Funds (Part 2 of 2) RE263 RE212 Short Sale Contract Short Sale Exhibit F94 Short Sale Exhibit RE253 Request Repairs Amendment to Address Concerns with Property F107 Amendment During Buyer s Right to Terminate RE262
HUD Q. This is my first HUD bid. Where do I start? A. Step 1 Register at www.hudhomestore.com with the NAID number for your company. Solid Source Realty INC HUD NAID # SLDSRC5036 Solid Source Realty, GA HUD NAID # SLDSRC5781 Step 2 Click submit bid next to the subject property online and follow instructions for submitting an offer. Q. What is the process for registering online? A. Only HUD registered selling brokers can place bids on HUD homes. Solid Source Realty and Solid Source Realty GA are both registered and each has a unique NAID number. While the broker is registered, each individual agent who plans to bid on a HUD home must also register themselves by visiting www.hudhomestore.com and selecting Register from the top, right-hand corner of the homepage. Q. An Inactive error message was received after trying to login. What should I do? A. When placing a bid, if an error message appears stating the firm is inactive, login to your personal profile on www. HudHomeStore.com and update your personal information. The brokerage firm is active, however that message will appear when the agent s personal information needs to be updated. IMPORTANT NOTE: Be sure to check your profile for accuracy before making a bid. Q. Can I request repairs or an allowance for repairs? A. No. HUD homes are sold as is with no warranty and repairs prior to closing are prohibited. Agents and buyers should always review the Property Condition Report and any related documents under the Addendums tab of the property profile. Q. Should my buyer get a home inspection? A. Yes. Even though repairs cannot be requested and the home is being purchased as is, a home inspection will alert the buyer to issues within the property that need to be addressed after closing. Q. Does HUD require a signature with blue ink? A. Yes. HUD requires that all contracts have original signatures in blue ink. Once the HUD bid has been accepted, Solid Source will email a HUD Authorization Letter to the agent email address on file. This letter authorizes the agent to sign the HUD contract (your name) on behalf of the broker and should be sent to HUD along with your offer. If this letter has not been received after an accepted offer please send a request to broker@solidsource.net. Please refer to instructions provided by HUD at www.hudhomestore.com for further details pertaining to submitting offers. Q. How does HUD send notice of a winning bid? A. Once a bid has been accepted by HUD both the agent and the broker will receive notification by email. Agents may also review the bid status by logging into their account on www.hud HomeStore.com. Q. Is there a resource for HUD buyer questions? A. Yes. HUD offers a Buyer FAQ section at http://portal.hud.gov/hudportal/hud?src=/program_offices/housing/sfh/ reo/reobuyfaq.