Category: Real Estate Made Crystal Clear With Dana Sparks

If something happens AFTER closing, who is responsible? In other words, must a Seller pay for a hone warranty if they agreed to do so in the contract but forgot prior to closing? What obligations “SURVIVE” the contract? Is it different in the Georgia Association of REALTORS (GAR) contract package vs. the RE Forms contract package? The following is a synopsis of the latest episode of “Real Estate Made Crystal Clear” with our very own Dana Sparks. You can watch the video in its entirety below. In the world of real estate contracts, the concept of contract survival holds crucial significance. Today, we’ll explore the variances between the Georgia Association of Realtors (GAR) contract and the RE Forms contract, specifically focusing on their survival clauses. So, what exactly does it mean for a provision to “survive” a contract? Let’s dive into the details and shed light on this important topic. Survival of Contract: What Does it Mean? When a contract ends, typically at the closing of a transaction, the parties’ obligations towards each other also come to a conclusion. However, there are certain provisions that continue even after the contractual relationship ends. These ongoing obligations are said to “survive” the termination of a contract. Survival Clauses in the GAR Contract According to legal expert Seth Weissman, the GAR contract does not specifically mention breach occurrences after closing. However, claims arising after the closing are limited by the principle of merging the purchase and sale agreement with the deed conveyance. This means that unless the purchase and sale agreement explicitly states provisions that survive the closing, they cease to have legal effect. In paragraph C40, titled “Survival of Agreement,” the contract identifies specific elements that survive the closing: Obligation to pay real estate commission Warranty of title Written representations of the seller regarding the property or neighborhood Buyer’s indemnification obligations related to property inspection Condemnation section Section on attorney’s fees Obligations regarding ad valorem real property taxes Any obligations agreed upon by the parties to survive the closing Each of these provisions remains in effect after the closing, ensuring the parties’ ongoing obligations. Survival Clause in the RE Forms Contract In the RE Forms contract, the survival clause can be found in paragraph 12.7 of the standard terms. The clause states that unless otherwise agreed in the contract or any other document executed by the buyer and seller, the provisions of the contract survive the closing. This means that the entire contract, unless specified otherwise, remains in force even after the closing. The Magic Phrase: “This Provision Shall Survive Closing” In the GAR contract, the use of the phrase “This provision shall survive closing” is crucial for including additional obligations beyond the listed items in paragraph C40. By utilizing this magic phrase, agents can negotiate and establish contractual obligations that extend beyond the closing. It ensures that these provisions are legally binding even after the transaction concludes. Special Stipulations to Consider Apart from the survival clause, the GAR contract offers a library of special stipulations. These stipulations allow agents to address specific issues that may arise during or after the closing. For example, survival of conditions or unfulfilled conditions discovered shortly before closing can be handled through these provisions. In conclusion, understanding contract survival is essential for real estate professionals representing buyers and sellers. While the GAR contract specifies certain provisions that survive the closing, the RE Forms contract deems the entire contract to remain in effect unless otherwise stated. Remember, if you’re working with contracts other than GAR or RE Forms, consult with an attorney to determine the survival clauses applicable to those contracts. Watch the entire video for more information here:    

What Happens If Your Real Estate License Lapses During a Transaction? In the fast-paced world of real estate, it’s easy for time to slip away from you. Perhaps, like many others, you might find yourself in the middle of a transaction when your real estate license lapses. This daunting scenario was recently addressed by Dana Sparks, broker of Maximum One Greater Atlanta Realtors and director of the Real Estate Academy of America, in a helpful video. For a comprehensive understanding of this topic, we highly recommend watching Dana’s full video, but let’s break down the critical points she highlighted to help you navigate this situation effectively. Understanding Real Estate License Lapse In most cases, a license lapse occurs when an agent fails to complete their Continuing Education (CE) credits or fails to renew their license every four years. When your license enters a lapse status, it is considered inactive and is no longer held by any broker. This can be a problematic situation, especially if you’re actively working on a real estate transaction. Managing Ongoing Transactions During a Lapse It’s crucial to remember that all contracts in the real estate industry are done in the name of your broker. So, if your license becomes inactive during an ongoing transaction, your broker is permitted to sign amendments and documents on your behalf. While your license is inactive, it’s important to ensure that the cooperative agent (or co-op agent) sends any documents that need to be signed to your broker. Re-Activating Your Real Estate License To reactivate your license, you will typically need to complete any outstanding CE credits or pay any fees to the relevant state regulatory body (in Georgia, for instance, this entity is often referred to as “Greg”). In addition, you’ll need to reaffiliate with your broker using a specific change form. What About Your Commission? In most cases, as long as your license was active when the contract was initiated or went binding, you are still eligible to receive your commission—even if your license goes inactive before closing. This is governed by Georgia License Law §OCGA 43-40-18c(5), which stipulates that as long as the transaction was started when the license was active, the broker may pay that licensee’s commission. The Bottom Line The important thing to remember is that your license must be active and held by a qualifying broker when a contract is initiated and goes binding. If your license lapses or goes inactive before it closes, the broker can still pay you your commission. Meanwhile, the broker will be responsible for signing documents. Special Cases: Deceased Agents with Pending Deals If an agent with an active contract unfortunately passes away, the broker can still sign the documents. Furthermore, the broker can pay the commission to the estate or heirs of the deceased agent. This scenario falls under Georgia License Law §OCGA 43-40-25b(17), which states that a broker may pay the estate or heirs of a deceased real estate agent, provided the agent had a valid Georgia real estate license at the time the commission was earned and at the time of their death. Navigating a license lapse can be complex, and the help of an experienced professional like Dana Sparks can be invaluable during such a time. Don’t forget to view the entire video for an in-depth discussion of this topic. And remember, to avoid finding yourself in this situation, always keep track of your license renewal timeline and CE credit requirements. The key to success in real estate often lies in proactive management and attention to detail.    

Can a Seller’s (Listing) Broker change a Buyer’s Broker commission? When can they do that? Is it legal per GA license law? At what point do they have to disclose any changes? The following is a synopsis of the latest episode of “Real Estate Made Crystal Clear” with our very own Dana Sparks. You can watch the video in its entirety below. In the world of real estate, agents often encounter situations where the co-op commission for a buyer’s broker ends up being different than what was initially advertised in the MLS. These discrepancies raise questions about the legality and regulations surrounding alterations to a broker’s co-op commission. In this blog post, we will explore the various facets of this topic and provide in-depth insights for real estate agents. Seller Agrees to Total Commission When a seller decides to list their property for sale, they enter into a seller brokerage agreement that outlines the total commission to be paid. In jurisdictions like Georgia, the listing broker typically shares a portion of this commission with the broker representing the buyer. This shared commission, known as the co-op commission, is communicated through the MLS service. The seller brokerage agreement, such as the Georgia Association of Realtors (GAR) listing agreement form f-101, specifies the negotiated commission amount. It distinguishes between the total commission paid by the seller (Section 4A) and the portion of that commission shared with the cooperating broker (Section 4B). Commission Adjustment to Co-Op Commission Under the GAR seller brokerage agreement (Paragraph 4C), there are circumstances where the listing broker may choose not to pay the cooperating broker the commission initially mentioned in Section 4B. These circumstances need to be clearly defined and agreed upon between the listing agent and the seller. Commonly, this adjustment occurs when the listing agent is the first to show a buyer the property, even if the buyer is represented by another broker. It is crucial for agents to have open and transparent discussions with sellers about potential changes to the co-op commission. Sellers may have varying preferences, with some agreeing to adjust the commission to incentivize the listing agent to bring buyers, while others may prefer to maintain the initially communicated commission to ensure fairness. MLS Service & Disclosure of Co-Op Commission MLS services, such as FMLs and Georgia MLS, have specific rules and regulations governing the disclosure of co-op commission. In FMLs, for example, there is a dedicated field on every listing called “buyer agency compensation,” which notifies the buyer’s broker of the offered commission by the selling broker if they participate in the sale. According to MLS rules, any potential reduction in the compensation payable to the cooperating broker must be clearly communicated before the submission of an offer. This information should be included in the public remarks section of the listing to ensure transparency for all interested parties. Seller Approval of Changes to Co-Op Commission Agents must obtain the seller’s consent when considering alterations to the co-op commission for the buyer’s broker. It is essential to have clear discussions with the seller about potential changes and document their agreement in the seller brokerage agreement or a special stipulation. While some sellers may agree to adjust the co-op commission to incentivize buyer’s agents, others may prefer not to alter the commission structure to ensure fairness and encourage buyer’s agents to bring potential buyers. Ultimately, the seller’s approval is crucial in determining any changes to the co-op commission. What if the Property is not Listed in an MLS Service? In cases where a property is not listed in an MLS service, such as new construction or off-market listings, it becomes even more important to negotiate the buyer’s broker commission before showing the property. Since there is no contract to cooperate through the MLS, the financial arrangements between the buyer’s broker and the listing broker need to be worked out in advance. Agents should proactively communicate and come to a mutual agreement on the co-op commission before involving buyers. This approach ensures transparency and avoids potential conflicts regarding compensation when dealing with properties not listed in an MLS service. Buyer Obligation to Pay Buyer’s Broker Commission Buyers also have a role to play in understanding the commission structure. When buyers enter into a buyer brokerage agreement with their broker, it outlines the commission the buyer is responsible for paying to their broker. This amount is typically offset by the commission paid by the seller or listing broker, as evidenced in the MLS service. Buyers should carefully review their buyer brokerage agreement to understand their financial obligations. The agreement will clarify how the commission paid by the seller or listing broker will offset the commission owed by the buyer to their broker. In conclusion, understanding the intricacies of co-op commission changes is vital for real estate professionals. Alterations to the co-op commission are allowed, but they must be agreed upon by the seller and communicated clearly to all parties involved. MLS services require transparency regarding any potential adjustments to the commission, ensuring that buyers’ brokers are aware of the changes before making an offer. By adhering to these guidelines and having open discussions with sellers, agents can navigate co-op commission changes while maintaining ethical and legal standards in their transactions. Watch the entire video for more information here:  

Listings are the “Name of the Game!” The following is a synopsis of the latest episode of “Real Estate Made Crystal Clear” with our very own Dana Sparks. You can watch the video in its entirety below. In the highly competitive real estate market, obtaining listings is crucial for long-term success. Whether you’re navigating a seller’s market or any other market, focusing on acquiring listings and assisting sellers in selling their homes should be a priority. If you’re wondering how to generate listings effectively, we’ve got you covered with three fun and straightforward tips shared by industry professionals. Let’s explore these strategies that can help you expand your listings and attract potential clients. Tip #1: Neighbor Open House – A Golden Opportunity Courtesy of Sean Delaney with Max Number One Realty Greater Atlanta, we bring you an exciting idea known as the Neighbor Open House. When hosting an open house for your listing, consider organizing an exclusive event for the neighbors. By inviting neighbors to explore the property, you create a sense of community and foster curiosity about the listing. Neighbors often compare their homes to those on the market, making this an excellent opportunity to offer a comparative market analysis and potentially secure additional listings within the neighborhood. Remember to have a sign-in sheet for registration, allowing you to follow up with interested individuals and offer your services. Tip #2: Harness the Power of Video Tours In today’s digital age, utilizing social media platforms and video content is essential. Take advantage of this by creating video tours of other listings and sharing them on various platforms like YouTube, Facebook, Instagram, and TikTok. Potential buyers love visual content, and by showcasing walkthroughs of homes for sale, you not only attract buyer interest but also capture the attention of potential sellers. A detailed video walkthrough provides an immersive experience, allowing viewers to envision themselves in the space. Be mindful of local regulations and seek written permission from the property owner or authorized agent before marketing a property that isn’t your own. Tip #3: Showcase Success with Under Contract Signs Sometimes, the simplest methods yield the best results. When you successfully secure a property under contract, don’t hesitate to place an “Under Contract” sign on the front yard. Surprisingly, this practice has become less common in recent years. By displaying the sign, you create visibility and curiosity among passersby, especially those who frequently drive past the property. The quick sale or the fact that the property is under contract can capture their attention and prompt them to reach out to you for assistance with their own real estate needs. In conclusion, this blog post explored three easy and effective ways to generate listings as a real estate agent. The Neighbor Open House strategy allows you to engage with neighbors, potentially leading to more listings in the neighborhood. Video tours offer a captivating way to showcase properties, attracting both buyers and sellers. Lastly, utilizing “Under Contract” signs provides visibility and demonstrates your success in the market, inviting inquiries from interested sellers. Watch the entire video for more information here:    

Georgia County Property Tax Assessments are out & many Homeowners are discovering they will have to pay a LOT MORE in property taxes in 2023! There are companies out there contacting owner – YOUR Past Clients & Prospects – offering to help them with a Property Tax Appeal for a FEE. As a Real Estate Agent, YOU are in a position to be of service to your clients & help them with information for their Property Tax Appeal for FREE! What do YOU get out of it??? The Blessing of offering a Service! Potential Future Business! Potential Referral Business! The following is a synopsis of the latest episode of “Real Estate Made Crystal Clear” with our very own Dana Sparks. You can watch the video in its entirety below. As a real estate agent, it’s crucial to stay informed about the latest developments that affect homeowners. One such development is the reassessment of property values and subsequent increases in property taxes in many counties. Homeowners are being approached by various companies offering assistance in fighting these tax hikes. However, as a knowledgeable agent, you have the tools and expertise to provide a similar service to homeowners, helping them appeal their property tax assessments and potentially save money. In this blog post, we will explore how you can offer this valuable service to your clients and prospects, positioning yourself as a trusted advisor in their real estate journey. Understanding the Situation Counties across the country are reassessing property values, leading to an increase in property taxes for many homeowners. Companies are capitalizing on this situation by reaching out to homeowners with offers to fight these tax increases through property tax appeals. They promise to handle the entire process, from start to finish, and claim that a significant percentage of their clients receive a reduction in their property tax bills. Your Role as a Real Estate Agent As a real estate agent, you possess the knowledge and expertise to conduct comparative market analyses (CMAs) or competitive market analyses (CMAs). These analyses involve evaluating similar properties in the area and assessing their market values. By performing a CMA, you can help homeowners challenge their property tax assessments and potentially obtain a reduction in their tax bills. Providing a Valuable Service Offering property tax assessment assistance to your past clients, customers, and prospects is an excellent opportunity to provide them with value. By leveraging your expertise and the available tools, you can analyze the market and provide homeowners with an estimate of their property’s market value. This estimate can be used as supporting evidence in their appeal against the tax assessment. By offering this service at no additional cost, you demonstrate your commitment to helping homeowners and building long-term relationships. The Benefits for Homeowners Saving money on property taxes is a significant advantage for homeowners. By successfully appealing their property tax assessments, they can reduce their tax bills, potentially saving a substantial amount of money each year. This financial relief can be a valuable incentive for homeowners to work with you and refer others to your services. The Process When assisting homeowners with property tax appeals, it’s crucial to follow a systematic approach. Start by gathering the necessary information about the property, such as its assessed value and recent tax bills. Then, conduct a thorough market analysis, comparing the property to similar ones in the area. This analysis will provide you with solid evidence to support your appeal. Present the findings to the homeowner, explaining how the appeal process works and the potential benefits. If they agree, assist them in submitting the necessary paperwork and guide them through the entire process until a resolution is reached. In conclusion, as a real estate agent, you have a unique opportunity to assist homeowners in appealing their property tax assessments and potentially saving them money. By conducting thorough market analyses and providing compelling evidence to support their appeals, you can position yourself as a trusted advisor and advocate for your clients. This additional service comes at no extra cost to homeowners and can pave the way for future business and referrals. Embrace this chance to offer value to your clients, strengthen your relationships, and solidify your position as a real estate professional dedicated to their success. Watch the entire video for more information here:  

The Georgia Association of REALTORS (GAR) has released their midyear revisions to the GAR Contract Package. This video covers the 2023 Midyear Changes / Revisions to the Purchase & Sale Agreement. Stay tuned for TWO more videos continuing in the series of Midyear Changes to the GAR Contract Package. The following is a synopsis of the latest episode of “Real Estate Made Crystal Clear” with our very own Dana Sparks. You can watch the video in its entirety below. In this blog post, we will delve into the revisions made by the Georgia Association of Realtors (GAR) to their contract package. GAR releases a new contract package every January, followed by mid-year revisions primarily focused on syntax errors, grammatical corrections, and clarifications. However, occasionally, they introduce important conceptual changes. The revisions we will discuss were released on June 1st, 2023. Revisions to 20 Forms GAR made revisions to a total of 20 forms in their contract package. While we have covered the changes in the Purchase & Sale Agreements and Brokerage Agreements in separate videos, there are several other forms worth exploring. In this blog post, we will focus on the Termination Unilateral TNR, Temporary Occupancy Agreement for Seller After Showing, VA Loan Contingency Exhibit, and forms related to the attorney as the holder of earnest money. Temporary Occupancy Agreement for Seller After Closing Let’s start by discussing the changes made to the Temporary Occupancy Agreement for Seller After Closing. GAR added a new phrase in paragraph 11, stating that if a seller fails to vacate the property within the agreed-upon timeframe after closing, they will be liable to the buyer for financial damages, including actual attorneys’ fees. This addition clarifies the legal and financial ramifications for sellers who become holdover tenants or tenants at sufferance. Unilateral Termination & Release The Unilateral TNR (Termination and Release) form, also known as form f522, underwent a significant improvement. Previously, it created confusion as it had signature lines for both the seller and the buyer. However, with the latest revision, GAR has simplified this form by removing the specific buyer and seller signature lines. Now, it only requires the signature of the party giving notice, making it clear that a unilateral notice can be validly executed with just one party’s signature. This change eliminates the ambiguity that previously surrounded the termination process. VA Loan Contingency Exhibit The VA Loan Contingency Exhibit, labeled as form f410, did not undergo significant changes in the June 2023 revisions. The revisions made in January still stand, emphasizing that a termite letter may be paid for by either the buyer or the seller. However, the latest revision introduced a clarification stating that if any re-inspection or updated termite letter is required due to seller-corrected infestation, the fee for these services will be the responsibility of the seller, in addition to any contribution the seller makes toward the buyer’s closing costs. Forms Related to Closing Attorney as Holder of Earnest Money When the buyer and seller agree to have the closing attorney hold the earnest money, two forms are required. Form f510 serves as an exhibit to the contract and allows the parties to identify the closing attorney responsible for holding the earnest money. In the June 2023 revisions, GAR changed the time frame within which the closing attorney must agree to fulfill their responsibilities. Previously set at three business days, it has now been extended to five business days. The second form, f511, titled “Agreement of Closing Attorney to Serve as Holder of Earnest Money Escrow Agreement,” is signed by the closing attorney alone and does not require signatures from the buyer or seller. In the recent revisions, GAR modified paragraph two to reflect the updated time frame of five business days for the closing attorney to sign the agreement and become the holder of the earnest money. Failure to meet this deadline will result in the alternate holder named in form f510 becoming the holder. In conclusion, we discussed the revisions made by the Georgia Association of Realtors (GAR) to their contract package. While the mid-year revisions primarily focused on syntax and clarity, some crucial changes were introduced. We explored the changes made to the Temporary Occupancy Agreement, Unilateral TNR form, VA Loan Contingency Exhibit, and forms related to the attorney as the holder of earnest money. GAR’s commitment to clarifying contract language and improving the overall contract package ensures a more transparent and efficient real estate transaction process. Watch the entire video for more information here:  

The Georgia Association of Realtors (GAR) has recently introduced significant mid-year revisions to the GAR 2023 Contract Package. In this episode of “Real Estate Made Crystal Clear,” we bring you an essential synopsis of the latest developments, featuring the knowledgeable insights of Dana Sparks. For a thorough understanding of these updates, we invite you to watch the video in its entirety below. Identifying the Revised GAR 2023 Contract Package Forms To ensure you are working with the latest revision of the forms, GAR provides an index of changes alongside the purchase and sale agreements. The mid-year revisions, released in June 2023, can be identified by the date at the bottom of the document, which should read “6/1/23” for revised forms. Changes to Title Insurance Under the Title Insurance section, GAR made a slight modification to the verbiage regarding buyer-directed mortgage lenders. Previously, the language stated that the buyer should obtain an enhanced title policy for greater coverage. The revision now states that the buyer should obtain such a policy if it can be issued for the property or for the buyer involved in the transaction. Purchase Price Amendments GAR introduced a change to the purchase price clause, specifically regarding the acceptable methods of payment. While the previous version mentioned wire transfer or immediately available funds, the revision added the phrase “by such method of delivery acceptable to the closing attorney.” This amendment grants the closing attorney discretion in accepting funds for the purchase price. Clarification of Closing Costs In June 2023, GAR restructured the closing costs section to enhance clarity. The revisions separate the seller’s monetary contribution from additional items the seller is responsible for paying, such as closing attorney fees. The language was also tweaked to improve comprehension, moving away from complex legal jargon. Disbursement of Earnest Money Regarding the disbursement of earnest money, the revised paragraph highlights that parties, real estate licensees, or other individuals with knowledge or interest in the disbursement may object or provide relevant information to the holder. This inclusion recognizes the valuable input other parties can provide when interpreting the disbursement of earnest money. Enhanced Inspection and Due Diligence Under the Inspection and Due Diligence section, GAR added a clause emphasizing the buyer’s right to inspect the property until closing. Additionally, the revision specifies that the seller must ensure all utility systems, equipment, and areas of the house, including basements, attics, and crawl spaces, are accessible for thorough inspections. Indemnification The indemnification paragraph now explicitly states that the buyer is not responsible for any damage resulting from actual defects in the property. This change clarifies that the buyer should not bear liability for pre-existing defects discovered during the inspection process. Brokerage Relationships GAR provided a clearer definition of designated agency within the Brokerage Relationships section. They added that designated agency occurs when one licensee exclusively represents the buyer and another licensee exclusively represents the seller, further elaborating on this type of agency relationship. Brokerage Disclaimer The Brokerage Disclaimer paragraph underwent slight revisions, reiterating that the buyer and seller should not rely on any advice or representations of brokers outside of the agreement. It also emphasizes that brokers are not obligated to inspect the property for defects and advises seeking specialized expertise, such as that of a construction expert or structural engineer, for specific concerns. Broker Rights Upon Buyer/Seller Default To enhance clarity, the rights of the broker in the event of buyer or seller default were specifically attributed to “broker” rather than “every broker.” This amendment aligns the language with the context of the contract. In summary, the mid-year revisions to the Georgia Association of Realtors’ 2023 contract package bring important updates to various sections of the purchase and sale agreement. The changes enhance clarity. Watch the entire video for more information here:  

How do you write up a contract on the Georgia Association of REALTORS (GAR) package for all cash in 2023? What if Buyer is getting a hard Money Loan? Is there an Appraisal contingency on a cash contract? When may a Seller terminate on a cash contract? The following is a synopsis of the latest episode of “Real Estate Made Crystal Clear” with our very own Dana Sparks. You can watch the video in its entirety below. In today’s contract tip, we delve into a crucial aspect of real estate transactions, namely the GAR F401 – No Financing Contingency Exhibit by the Georgia Association of Realtors (GAR). Formerly known as the Cash Exhibit, this exhibit underwent a name change in 2023 to better reflect its purpose. In this blog post, we’ll examine the exhibit and highlight key points that both buyers and sellers should be aware of when utilizing this document. Understanding the No Financing Contingency Exhibit The No Financing Contingency Exhibit (GAR form F401) is designed to address two distinct scenarios. The first scenario involves an all-cash purchase, where the buyer asserts their ability to complete the transaction without any reliance on financing. The second scenario pertains to buyers who opt for financing but willingly forego making the purchase contingent upon loan approval. Instead, they are prepared to risk their earnest money should they fail to secure a loan or convince a lender to provide the necessary funds. Implications for All-Cash Purchases If the buyer intends to make an all-cash purchase, they must confirm that they possess sufficient liquid assets to complete the transaction. Notably, in this situation, the buyer relinquishes the unilateral right to extend the contract by eight days unless it pertains to a closing attorney’s readiness, unrelated to any delays caused by mortgage lenders. Buyer’s Willingness to Risk Earnest Money For buyers seeking financing but waiving the financing contingency, GAR F401 includes provisions that account for their preparedness to forfeit earnest money in the event they are unable to secure a loan. This section allows buyers pursuing regular institutional financing or hard money loans to relinquish their right to unilaterally extend the closing based on eight days, provided it is not related to loan or trade disclosure issues. The buyer’s right to extend is only applicable if the closing attorney is unready due to factors unrelated to mortgage lender delays. Verification of Funds Paragraph two of the exhibit outlines the buyer’s obligation to provide proof of funds within a specified timeframe from the binding agreement date. Buyers must furnish documentation or arrange for it to be provided to the seller, explicitly detailing the source of funds necessary for purchasing the property. Proof of funds may include letters from trust accounts, stock brokerage firms, financial institutions, or account statements from trusts, among other possibilities. Furthermore, if the buyer opts for financing, they must also provide a loan commitment letter from the mortgage lender within the same timeframe. Seller’s Termination Rights To safeguard their interests, sellers are granted the right to terminate the agreement if the buyer fails to provide documentation of funds for all-cash purchases or a loan commitment letter for financed transactions within the stipulated timeframe. This provision ensures that sellers can make informed decisions based on the buyer’s financial capacity. Appraisal Contingency Even in all-cash transactions without involving a lender, the exhibit highlights the need for negotiation between the buyer and seller regarding an appraisal contingency. The agreement specifies whether the property must appraise for at least the purchase price, and the type of appraiser and selection process should be established. It is crucial for both parties to acknowledge that an all-cash transaction does not automatically exclude the possibility of an appraisal contingency. In case the property does not appraise for the sale price, the exhibit provides a timeframe within which the buyer can submit an amendment requesting a price reduction. However, it’s important to note that sellers are not contractually obligated to lower the price unless otherwise agreed upon in a special stipulation within the purchase and sale agreement. In conclusion, the GAR F401 – No Financing Contingency Exhibit serves as a vital component of real estate transactions. Whether you’re a buyer or a seller, understanding the exhibit’s implications is crucial to ensure a smooth and informed negotiation process. By acknowledging the exhibit’s requirements, including verification of funds, termination rights, and potential appraisal contingencies, both parties can navigate the complexities of real estate transactions with confidence. Watch the entire video for more information here: