Skip to main content

Contracts Can Be Fragile


The following is a story as told by a guy in our office I’ve changed some of the names, but there really aren’t any innocents to protect here, unless we’re talking about the guy in our office. 

Mrs. Slaughter was both my Spanish teacher my freshman year in high school and my English teacher my senior year.  First day of school my freshman year, Mrs. S is calling roll in my Spanish class, and she gets to me.  I raise my hand and say, “Here,” and she pauses and just stares at me.  Not good.  She then asks, “Are you related to a SHAUN Greene?”  

Yes, ma’am.  He’s my brother.” (Shaun had graduated the year before and had Slaughter for English and Shaun was a bit of a . . . rapscallion, shall we say.)  

She squinted her eyes a bit like Clint Eastwood did in his “Dirty Harry” movies before he delivered his killer line that was meant to put the fear of God (or more appropriately, the fear of Harry) into the criminal and said, pointing her pencil at me like she was holding a .44 Magnum, “I’ll be watching you!”  I was a marked man from day one.

Fast forward to my senior year.  Mrs. S is in the middle of a lecture either on the symbolism in Shakespeare’s sonnets or how proper grammar saved the world from the Black Plague when Stacey Stephenson reaches over and sort of pinches my arm.  I look down at my arm and then over at Stacey and ask, “What was that for?”  Before Stacey could respond, Mrs. S stops mid sentence and screams, “Greene!  That is the last time you will interrupt me when I’m up here speaking!  Do you understand me?!”  I was absolutely floored (I seriously was not a problem student, and Mrs. S had never had to stop and ask me to stop talking in her class Stacey was another matter entirely), and I think the look on my face showed absolute genuine surprise.  As I attempted to get my wits about me and defend myself, Stacey piped up and said, “Sorry, Mrs. Slaughter. It’s my fault.  Grant had a piece of fluff on his arm, and I was just picking it off.  He was just asking me what I was doing.”  The rage drained from Mrs. S’s face it went from a crimson red to a flush white in about a half second and she said, “Okay, thanks. But Greene had it coming to him.  I blame my brother. 

Every licensed real estate agent had to take a certain number of hours (that might feel close to infinity) in their training on the subject of contracts, so I’m not about to put myself up as an expert on real estate contracts.  This next piece, of advice, however, comes simply from my perspective as a lender and what should be avoided in a real estate contract to assure a smooth loan process and timely close.

On lines 61 and 62 of the Arizona Residential Resale Real Estate Purchase Contract (the line numbers may vary by state), you can write in personal property items that you want to be included in the sale/purchase of the house this is where you can absolutely blow up the deal, from a lender’s perspective.  Rather than going into a full-blown dissertation on the whys and why nots, let me just say this: leave these lines blank.  This doesn’t mean we’re trying to discourage you from getting a lawnmower or a fancy dining room table thrown into the deal, just don’t include it in the real estate contract make those items a part of a separate bill of sale.  You can reference the real estate contract as the means by which these items will transfer from one party to the other in the bill of sale all day long, but it’s not wise to mention that bill of sale on lines 61 and 62 in the real estate contract.  Suffice it to say, if you do, you’ve just given yourself a WHOLE BUNCH of extra time-consuming work to do from the underwriter.  We could go into a long explanation of valuations and liabilities, but let’s just say this: someone’s “older brother” had done something in the past with personal property in a real estate contract to incur an underwriter’s wrath, and underwriters have memories as long as Mrs. S’s.  You might think that what I just mentioned is rather inconsequential, sort of like a piece of fluff, but a piece of fluff can get you (or your deal) “slaughtered”.  I’ll now keep quiet. 

Comments

Popular posts from this blog

An Age-Old Concept Reaping Future Rewards

W hy are social media like Facebook and Instagram so darn popular among real estate and mortgage folks?   Hint: the top reason might be an endless supply of memes, cat videos, and the chance to be snarky, but the other reason runs a VERY CLOSE second.   Give up?   Answer:   They’re free – and they really help even the playing field by enabling a one-person shop look and market like an organization who employs an army of wordsmiths and graphic artists. This new century is glorious, right?   With that in mind, let me re-introduce you to a centuries-old concept that is equally glorious – and can help IMPROVE the playing field for you, regardless of the size of your team: karma.   On the subject of “free”, I’m not suggesting that you work for free, but when you freely give of yourself and your knowledge, you’ll see a greater payoff, I promise! Recently, an agent came to us with a question: she has a client who is looking to sell his condo.   It...

The Power of Doubt

We find ourselves in that weird week between Christmas and New Year’s – that week that feels a bit like the Twilight Zone where no one’s sure what’s real and what isn’t.   Because of that, most people tend to focus on one of two things: eating as much as possible or setting goals for the upcoming year.   The former is squarely focused on the present – how much can I stuff into my gaping maw at this very moment before I pass out and/or puke – while the latter is focused on the future.    Last week, before the Twilight Zone kicked into full gear, I read a short article that resonated with me, and I think it’ll prick up your metaphorical ears, too.   The author of the article is a gentleman who professionally trains Olympic athletes, and he highlights the talents of a particular athlete from the Philippines who is training to be a marathon runner.   He points out that this runner is not a professional athlete, nor does she receive any type of financ...

Get to the Point (Posted February 29, 2016)

As you may have already noticed, there’s some amateur art included in this week’s newsletter.   While it’s certainly better than a crayon drawing that might grace a refrigerator that’s supposed to be “mommy” but looks more like a B-movie creature, we all acknowledge there’s a reason the guy in our office who drew this . . . i s still working in our office rather than making a living elsewhere.   Be that as it may, there’s a point to the picture: is this how you’re allowing your client to choose their mortgage company?   In many cases, it’s probably not too far off.   Agreed, it’s wise to stay on the right side of the law and be sure you’re never accused of “steering”.   With that in mind, many agents tell their clients that it’s completely their decision as to what mortgage company they use (and it is, of course) and effectively step back from the entire conversation – using the illustration to the left, they’re putting the blindfold ...