Ep. 21 – The “As-Is” Residential Contract

Matthew Maschler:
Welcome to the Real Estate Finder podcast. I’m Matthew Maschler, the Real Estate Finder, a real estate broker here in the free state of Florida. How are you doing today, Stacy? I’m tired. You’re tired? All right. Hopefully you’re selling a lot of real estate. I think actually we put two deals together this week, didn’t we? Yep. And it’s a very interesting time because we have this severe lack of inventory in Florida, but we did put two deals together, which was good. One of them was off market, one of them was a coming soon, and we were the first to see it. And if people ask, I’m going to have to do another episode on this one, because it was a really good story of finding a house on social media and not through the multiple listing service, but we’ll wait until that closes because we don’t want to count our chickens before we have.
But on your deal, is it signed? Is it executed? It’s already we’ll signed at one o’clock. All right. We’re actually having an in-person signing, so that’s very exciting. So because of that, speaking of very exciting, one of the ideas I had was to go through the contract, the real estate contract on one of these deals because there are terms that sometimes people have to negotiate or think about. And one of the secrets of why I want to do this podcast is sometimes Stacey and I talk about things and I said, man, if we could have recorded that, that would’ve been good for our agents to hear. That’s right. Yeah. So we printed out the contract. I’m not going to use any specific names or addresses, but we’re basing this one on the contract that we just did. So there’s different types of contracts in Florida, and I’ve talked about that on an earlier show.
Why that the Bar Association and the Realtors Association got together and made approved forms because realtors are not lawyers and they should not be drafting contracts. So the Florida Bar and the Florida Realtors got together and made approved forms that realtors are allowed. They’re kind of like fill in the blank, and realtors are trained to use these forms and fill in the blank and make some small additions and corrections, but nothing too crazy. The most popular two contracts are the standard contract and the As is contract. Generally we’re using the As is contract much, much, much more predominantly, I’m pretty sure at signature at the real estate companies, we’re only using the As is contract. We’re not using the standard contract. I do use a standard contract at some time. The standard contract obligates the seller to make repairs to deficiencies, but the preference today is the As is contract.
So the as is contract, and we’ll talk about the as is provision when we get there. And the interesting thing about the contract is the contract has page numbers and also line numbers. So if someone says, Hey, line 2 36, and you just go ahead and look at it when there’s questions along the way when there’s questions in a real estate transaction, when my customer, buyer or seller asks me, Hey, can I do this? Or am I allowed to do that? My first question is, what does the contract say? And I go back to the contract and I read it, and it starts with the parties. The first fill in the blank is the name of the seller. Generally we get the name of the seller from the property tax records.
A lot of times in the MLS, the real estate agent listing agent will withhold the name of the seller. Sometimes they can put the name of the seller, sometimes they say withheld or owner of record. If I’m feeling cutesy, I will put withheld or owner of record in the contract because hey, you’re the listing agent. The reason there’s a box in the MLS that says the name of the owner is because me as the buyer’s agent, I need to know the name of the owner. And you’re telling me the owner’s name is withheld, so I’ll put withheld as a party’s name. But that’s
Staci Garcia:
Pretty rude
Matthew Maschler:
Or owner of record in the party. But I mean, that’s me being cheeky because the listing agent did that.
Staci Garcia:
I withhold it though. You withhold, yes, because I don’t think it’s great. Tons and tons of people are reading to see who the owner is, especially if it’s a 16 or 17 million house or a 25 million for
Matthew Maschler:
Property, for privacy reasons.
Staci Garcia:
And I think it’s nice to withhold the name.
Matthew Maschler:
And you can go on the property records, find out the exact name of the owner, and that’s who you should put in under the party’s name. And sometimes the reason why this isn’t obvious is because sometimes somebody passes away and now you have an heir or an executor that you’re dealing with or you’re negotiating with and you don’t really know. And it really is incumbent upon the listing agent to know who the owner is, who should be listed as the party, which is why it’s a field in the MLS. And sometimes the listing agents aren’t right, and you have to actually go through some hoops to find out. You find out that the owner’s name isn’t as appears in the property. Property records,
Staci Garcia:
This happens actually pretty often down here because people pass away and Florida’s a retirement capital. So people pass away and it’s in a trust and it goes to probate. It takes three months.
Matthew Maschler:
Well, if it’s in a trust, it doesn’t, it avoids probate. Sorry. But yes, we have these issues.
Staci Garcia:
So a lot of times the Palm Beach County property appraisers got the wrong person at that moment, so it does get a little sketchy.
Matthew Maschler:
So on this particular offer, we submitted it where the seller’s name was blank, and then the seller’s attorney called us up and said, well, you left the seller’s name blank. I said, well, that is correct because I don’t know who the sellers are. So when your sellers come in to sign the contract, please have them please add the seller’s name the way you want it in the contract, because that’s also the way that it’s going to be in the deeded. And we’ve probably now spent more time on line one, the seller.
Staci Garcia:
Well, actually pretty funny because I want to say even if you have an off market listing and it’s not through the MLS and you don’t have a listing agent, I did ask the seller who I thought was the seller that made sure this is you and your sister. And he said, yeah, and he gave me their names, but in the end, he spelled his sister’s name wrong. Oh wow. Yeah, I had the wrong last name. So it was pretty funny. So you really need to, they have a lawyer. I’d rather deal with the attorney and make sure it’s all right.
Matthew Maschler:
Alright, so then the next line, the buyer and I could actually talk about the buyer longer than I could talk about the seller, but I’m going to save that generally the buyer’s name. But as your agent see, before the internet and people texting and quick appointments, if you really have that client consultation, one of the questions the agent really should ask the buyer is, how do you want to take title to this property? Nobody asks that question anymore, and that’s okay. But it is important to know if the people want to take title, the husband and wife, just one party is,
Staci Garcia:
This actually comes up for me a lot, a lot. I had one client who was super, super busy and his wife was not involved in the first transaction, so I automatically just assumed it was him. And then on the second transaction, he wanted nothing to do with it. So I said, don’t contact me anymore regarding this property, contact her. So I made her the person buying.
Matthew Maschler:
I’ll tell you my personal practice from before I was ever a realtor in Florida from just buying houses when I lived in New Jersey or whatnot, my personal, and I got married to my wife in 2001. My personal practice is to only put my name as the buyer and not to put my wife’s name. And the reason why is I’ll make an offer and then my realtor at the time, or my lawyer at time, whoever I’m dealing with at the time, we sign off on the offer, we submit the offer, we get a counter offer back, and let’s say they do only change a few terms. Now I have to sign and initial everything. Well, I don’t want to track my wife down. Hey honey, you have to sign and initial this and then go through the whole process with her. Now I’m sophisticated buyer, I’m a lawyer, I know how this process works, so I want to be the one that’s signing off on things and I’ll include her in the conversation, but why do I have to track her down and get her to sign?
Especially in a competitive market where we make an offer, maybe we make an offer on another house. So if in the home buying process I’m making offers on ultimately seven or eight different houses, and then they have counteroffers, they have amendments, we finally get to the house we need, and then there’s a couple of amendments, executions, a couple of extra pages, sign here, sign there, and there’s so much back and forth. I want to be able to just sign it, submit it, and move forward. And then in the course of the transaction, then there are certain times that things have to be signed off on. So at every time and every corner in the transaction, if I want to ask if I need to get an extension or revise this term or that term, stop everything, track my wife down, get her to sign it.
No, that’s not how I want to do the transaction. But then at the end of the day, at the closing, I want to instruct the title company on how I want to take title. And we’ll come back to that in a second because that’s going to be a different term of the contract. So my practice has always been to put just my name as the buyer. On the flip side, other people, some sophisticated buyers only want to put their wife’s name as the buyer because if there’s a default, if you want to walk away, if there’s an issue, if ultimately it ends up in a lawsuit, they don’t want to be tagged in the lawsuit, they want their wife to be the defendant in the lawsuit. Conversely with me, I don’t want my wife to be sued if I break the contract or breach the contract.
And I have in New Jersey on the other side, when I sold my house in New Jersey, when I moved down to Florida, my buyer breached the contract and I sued him. And because we took title as husband and wife, my wife had to be a plaintiff in the lawsuit. And that was not my preference. I think I ended up not making her the plaintiff. I think I only sued her and I figured I would deal with it, sued the defendant. I figured I would deal with it later. If the defendant made some kind of motion or defense motion that both parties had to be named as a plaintiff, I figured I’d take the risk to not have to involve her in a lawsuit where she was suing somebody. But that’s another reason why I wanted to do it that way. Okay, so with a small pause, we’re coming back to the buyer later.
We’re going to skip, we’re going to go to the next line. We have the property description. You need the exact address. And we had a funny situation on a property that we had rented a property to a customer. He turned around and he bought it from the landlord a couple of years later. And the legal description is different than the map, the imap and the street sign and the license, the driver’s license. Oh really? Yeah, it’s crawl key way, but legally it was crawl key way. It’s up at Lake Wir, but on the street sign, it’s not crawl key. It’s craw. CRAW, like crawfish driver’s license says craw. Google Maps says craw. Property records say craw.
Staci Garcia:
That’s
Matthew Maschler:
Right. And that’s very, very confusing. And what’s actually funny is on something similar, my house where I live, yeah, that’s true. I live in Woodfield Country Club and the sub developments all have street names that are quite similar to the sub development. So when I lived in Briarcliff, it was Briarcliff Circle, but it wasn’t Briarcliff Circle, it was Northwest 62nd Street. The street sign said Briarcliff. The legal description was Northwest 62nd. My driver’s license over the years had said both voting records says Northwest 62nd. So sometimes I show my ID 4, 1, 9 1, I can give out the address because I don’t live there anymore. I’ve lived in 20 years and that’s why I use that address, not my personal home address, Briarcliff and not Northwest 62nd. And that was confusing. And my son, he’s 17 years old, he just discovered that about our house because I was trying to use a different address for, I needed a separate address.
It was like one per household. We were entering a contest. So we did one in my daughter’s name and one of my son’s name, and I was able to change the street so it would look different. And he never knew that the street had a numbered name. And I explained to him that it was like legally the numbered name is the real name. So we actually have a nickname. So I said The Landings or iff, some of these streets in Woodfield and some of these other clubs have nicknames. So there’s a nickname for our street. It’s a
Staci Garcia:
Little confusing too because it depends on who lists if it’s a listing. And that’s the case with the house we sold to. I couldn’t find it on the map, it was a numbered name, but in everybody kept calling it the name,
Matthew Maschler:
Name. I’ve seen that in listings also because sometimes they use the nickname and sometimes they use the number name. And I’ve also seen people try to be a little cheeky with that. If you have the house that was on the market for a long time and then it’s re-listed at the other address, and then the history doesn’t show some prior sales and the 500 days on market, that’s smart. It’s a cheeky way to hide some information. So the street address, who knew how important that was. And then there’s the legal description, which you do need because it’s going to be on the deeded and then it’s going to be on the survey. And then we’re still in paragraph one here, personal property. So it says, unless it’s in this contract, there’s certain items. If it’s on the property at the day of the offer, they’re included.
So including ranges, ovens, refrigerators, dishwashers, disposal, ceiling fan light fixtures and light fixtures, drapery rods, it’s they updated contract recently, drapery rods, blinds, window treatments, smoke detectors, garage door openers, thermostats, doorbells, television wall mounts. Not the actual television, but the wall mount security gate, another access devices, mailbox keys and storm shutters. So everything that’s listed there in one C, if it’s on the property of the day of the offer, think about the day of the showing, it’s included. And then you have to fill in other items. So washer and dryer is not pre-printed because it’s not assumed that every house has a, or condominium has a washer dryer, whereas it is assumed to have a refrigerator in an oven. So generally you would put in washer dryer, and then you want to write in under personal property, anything else that you want, anything that you see that you specifically want. If you want furniture, if you want televisions, even if it’s named in there, it’s sometimes a good idea if you specifically want something to name it in there. But I’ve never seen things where people switch to dishwasher or switch to refrigerator, but I’d imagine it
Staci Garcia:
Can’t happen. Some people write as is per the MLS on a certain date.
Matthew Maschler:
Yeah.
Staci Garcia:
Then there’s photos in the MLS on a certain date,
Matthew Maschler:
And then you have to question does become, the only way to resolve that is a lawsuit. You want to be careful. Sometimes people would say, Hey, where’s the garage door openers at the closing? And we’d say, there are no, we don’t have ’em. Well, it says garage door openers in the contract. Well, only if it existed on the day of the offer season, then you’d have to determine whether or not they existed. So I always tell people if there’s something that you specifically want included in the contract, because then the next provision is the following items are excluded. So then you tell the seller if there’s a particular chandelier or something that they want basically a fixture, and we’ve talked about this, what is a fixture? If it’s affixed to the property, right? No one’s going to argue you can take a toilet, right? Because it’s a fixture.
You’d really have to do a lot of work, do a lot of work to get that out. Refrigerator on the other hand that’s just plugged in. Sometimes you have built-ins or whatever. So built-in furniture cabinets, wall units, et cetera are fixtures, but furniture aren’t. And you really want to describe in 1D NE what’s included in what’s excluded. There’s an old movie with Steve Martin called The Money Pit, and they went through the showing and the sellers jokingly said, oh, we’re taking that with us. And they took everything and I guess it was the pool, so obviously that was a joke. But then everything else after that, they weren’t kidding, but Oh, we love the lab. We’re taking that with us the door. We love taking that with us. So at the closing, everything was taken and it’s like, what do you mean? Why’d you take all this stuff?
Well, we told you what the show and we’re taking it with us. So I always think of that when I think you really want to tell, as a seller, you really want to exclude in the list in the MLS and the m LSS doesn’t control if the MLS says chandelier excluded. That’s the point of that is to tell the buyer’ss agent, when you’re making the offer, please exclude the chandelier in the line of exclusions. But the buyer doesn’t have to because the buyer’s making the offer. So if the buyer doesn’t exclude the chandelier and the listing agent misses it, that chandelier is going. So you really, really, really have to, as an agent, a lot of agents are out there listening to this. As an agent, you really have to be very careful and specifically list what’s included, specifically list what’s excluded. The MLS does not control if the MLS says the chandelier does not convey, if the contract doesn’t exclude the chandelier.
The contract controls not the MLS. The MLS is not binding. The only thing MLS is binding for is on the agent’s commission as the listing agent, I’m more offering a commission to a participating buyer’s agent that controls, because that’s a relationship between me and another agent. We’re members of the same association. So similarly, the contract can’t change the offer of comp in the MLS, but the MLS is merely an invitation for buyers to make an offer. And the MLS does not control when it comes to what’s included. So then you have, we’re finally out of paragraph one into paragraph two, we have the purchase price. You put the total purchase price in the first line, you have an initial deposit. Now in the days before the internet in the eighties and nineties when we made our offer, we would paperclip or staple a check for the initial deposit with the offer.
Usually it was a thousand dollars. It was called a binder or something like that. And what I liked about that process was when I’m working with a buyer and they’re going to make an offer of a half a million dollars on a piece of property, and I say to the buyer, okay, I need a check for a thousand dollars and if the buyer chokes can’t get me that check, I know that there’s going to be a problem coming later, right? I mean, everybody wants to see the proof of funds, I want to see the checkbook because I’ve had buyers not know where their checkbooks were. So I think that’s pretty common now. So getting that check and writing it out and writing it out to the title company and or title agency and putting, ever since we had Bob in here, I’ve been saying title agency, not how company, but you write down that $1,000 and it really tells the buyer that in their own mind that they have to be serious, that they’re really making an offer.
And we used to present the offer with a thousand dollars initial deposit, but now the initial deposit, it could either accompany the offer or be made within blank days. So when we’re submitting offers over email, we can’t submit the check over email. And then for several years, people were putting copies of the check in with the offer. I still recommend it because it does show there’s a check because the practice of the buyer’s agent making the buyer actually write that check is a good process. And it does show the other agent on the other side that you’re serious that you have that check written out to the escrow agents that is named in the next couple of lines. The problem is, is that we’re not signing them in person. We’re not signing the contracts in person anymore. So I’m not in the same room with the buyer. So if the buyer signs it seven o’clock at night through a DocuSign or through, we use our total brokerage software. Now I got the offer back as A PDF. How am I getting that check? So I’ve given up on that piece of the practice, I want to submit the offer ASAP, especially in this market.
But then there’s a second deposit, and the reason there’s a second deposit is that first deposit, that 1000, 3000 or 5,000, that’s really just to show interest, but it’s not a significant deposit. You really want to put down on a cash offer, 10 or 20% or it could be 1% or you really want to make a significant deposit to show the seller that you’re serious. The seller’s taking the house off the market, they’re not going to do it for a thousand dollars. So you want to make a second offer. I like to time the second offer to right after the inspections because during the inspection period of the assets contract, the buyer can cancel for any reason, get the deposit back. So I like to make it so that the additional deposit is made right after inspections, and then you add up the first deposit and the second deposit, and then any financing amount, and then you have the total amounts that you need for to close the, we could talk about the cash offer versus the financing offer.
So in a financing offer, you put down the amount that they’re going to borrow and the amount of cash that the buyer has to produce for the total amount, which would equal the purchase price. You can make a cash offer and still intend to get a mortgage because you’re literally not bringing cash in a bag to the closing, although they like to think that you are. They do like to think that you are. So sometimes when you make a cash offer, the sellers get upset when they find out that you’re getting a mortgage, but it’s none of their business, right? You’re going to sell stock or sell yourself or sell something to, well, you got to come up with the money some way and it doesn’t matter how so, or you borrow the money. So then you have time for acceptance. You want to put a day or two in for the seller to accept it.
I like to give a couple of days because if the seller, if it’s Tuesday morning when I drafted the offer and I make the offer expire Wednesday, but a couple of changes to the offer back and forth questions by the buyer, all of a sudden I don’t submit the offer until Tuesday night or Wednesday morning. Now the seller first has to look at it, and if the seller doesn’t sign it within the timeline, then you have to go back to the buyer to have the time for acceptance change. So I like to make it so that there’s a little bit of breathing room, but I don’t want to give the seller too much time to encourage the seller to put it off. But time for acceptance is important. It’s not binding. If the seller wants to accept it and it’s after the time for acceptance is over, you could just cross it out initial and then the buyer would initial it back, and then you put in number four, you put in a closing date and for the closing date, you have to put in a date a day and a month.
I’ve seen ASAP recently. That’s not going to work. I’ve had two lawyers, I’ve seen that, and then the buyer put as SAPI could understand the buyer putting it because they’re trying to tell the seller, Hey, hey, Mr. Seller, I’ll be flexible. What date would you like? Right? Maybe leave it blank instead so you don’t have to cross out the as SAP P, but the seller signed it and sent it back and now you have a contract with an essential term missing. Arguably, it’s not a contract, so is it enforceable or not? Who knows? It’s going to go to a judge, but you need to put in a date and the date should be a weekday, not a holiday, not a Saturday or Sunday and not on a holiday. You should put in a date, A date certain if it falls out on a holiday or a holiday observed it goes to the next available business day and not honor before the date.
Yeah, and whenever anybody wants honor before, I usually ask them, where in New Jersey are you from? Because in New Jersey, contracts all say honor before it means something else. In New Jersey, we’re not going to talk about that. This isn’t New Jersey show in Florida. We want a specific date on or before means nothing. If both parties want to do it earlier, they can. They just have to make arrangements with their lender and their title agency, their title closer, and they can make the date earlier if they want. If they want to make it later, they can sign a modification. Both sides have to agree, but it’s a certain date, and if you’re not ready to close on that date, you are in breach of contract. So always put in a date and a day of the week, not a holiday. I skipped something. I skipped in the purchase price, you put in the agent’s name, the initial deposit should be made payable to the escrow agent name below.
The escrow agent is not going to be the title closer. It can be, but it doesn’t necessarily have to be the name of the title. Agent is not listed in the contract. We’ll get to that later. So this is just a person who’s going to hold that money. Agents at the signature real estate companies generally use the signature title company as the escrow agent. They’ll hold the money until closing, and if they’re not doing the closing, they will transfer that to the escrow agent for closing. Then we have some standard property extension of closing date. It really has to be agreed to, but unless you have force majeure and another clauses that when that happens, you go back in and you look at it now, you don’t have to look at it in advance. Occupancy and possession, generally the date of the closing is the date that the new buyer gets the property.
And with nobody living there, the seller has to be out. And I can’t tell you it’s not often, but sometimes the seller doesn’t want to start moving until they get the money. No, Mr. Seller, you have to get out because on the closing date, when you get the money, the buyer’s getting the property. And sometimes you do find in an offer, I’ve had success in this seller’s market, getting my buyer’s offers accepted by offering a seller 30 days post-closing that they can stay in the property for no additional fee if there’s 10 different offers on the table. How do you make your offer stand out? And that’s something I’ve been doing with success because sellers like that, I do have a seller now under contract who? And it’s my seller. They needed that in their offer. They had a 45 day post-closing stay for free because they were going to use the money from the closing to buy their next place.
So they have 45 days after the closing with that money. I tried to use it recently, but for a buyer, but my buyer needed a property to live in. They were going to be coming with their moving van, and one of the reasons they wanted to buy a house was to move in. So they were not able to offer the seller a post occupancy agreement. I am hoping our offer gets accepted on that one. I’m confident it would’ve with the post occupancy, but I’ll keep my fingers crossed. There was a solution. You put it in a storage unit, it costs like $300, right? That’s two steps. Then you have to move it out at the end of the term, worth it to me to get the property versus not get the property. If they like the property, if there’s a tenant, the tenant’s lease survives the closing.
The buyer would usually know that there’s a tenant there, but just because the seller is selling doesn’t mean the tenant has to get out. A lot of tenants don’t know that. A lot of people could be taken advantage of that in these situations, but generally the tenants, their lease survives a change of ownership. And then we get to paragraph seven assignability. So if you assign a contract to someone, I have rights in the contract, I can assign them to somebody else. Sometimes you sell them to somebody else. So there’s three choices in the contract. There’s may assign the contract, may not assign the contract or may assign the contract, but remain liable for all obligations. And that’s the one I like to use is buyer and seller. What I said before is about I like to buy it in my name, but I like to take title somewhere else.
That’s where this comes in. So I take title in my name, but as long as I have the May assign and I do, but not be released from liability because that way the seller knows I’m on the hook, so it shouldn’t matter to the seller. If I assign the property, I’m still on the hook. I still have all the obligations to close, but instead of taking it in my name, I’m going to take it in me and my wife’s name or a trust or an LLC, and I’d like the right to change the name from the contract name to a different name that I’m going to take Title two. It should not bother the seller. If I can be released of liability, well that should bother the seller, right? If I don’t want to close, I sign the contract to Joe Schmo who acting in concert with me, then Joe Schmo defaults. But good luck trying to recover a
Staci Garcia:
Judgment. Would the seller ever accept may assign and be released? Why would I accept that?
Matthew Maschler:
You may not notice. See, my issue is I would never ask, ask a seller to do that. The seller chose me. I used a proof of funds and maybe this new buyer that steps in my shoes doesn’t have that proof of funds and will default. So I would never ask a seller to accept that term assign and be released. When I negotiate. I learned to negotiate for my father. He always negotiates for the other side and tries to fit himself in. There’s no reason why a seller should care if I’m going to assign the contract as long as I’m still legally liable to perform the contract, unless they’re trying to prevent a flip. I buy it from you for 500,000 and I sell the contract to somebody else, make 50 grand and then that person buys it. And that does happen. There are people out there that is their business model.
Staci Garcia:
So now this makes sense. So then the people that send out the emails that have all of these, it’s not my listing, but I have control over whether it gets sold or something like
Matthew Maschler:
That. If you see that, yeah, see, I get the other side of that. I got that we want to buy your house cash, but what they’re going to do, they’re going to give me a contract that they can assign. I get they’ll line up a buyer and they’ll make the difference between what they charge me. They don’t want to take title because they don’t want to pay the expenses of recording fees, interesting, et cetera. Okay? So that’s the assignability and that’s why said what we were waiting for when I said the buyer’s name is important, I will tell you what they teach at the central real estate companies is the may not assign. So when agents come onto the central real estate finder team, that’s one thing that I do differently or that I teach differently than they teach at Signature.
But that’s just coming from my experience. Generally, most signature agents will check, may not assign. I think the reason for that is about half the time when I do may assign but not be released, the other side objects. And if I really want the property, I just say, oh, that’s fine, whatever. And I make sure that the buyer’s name is the one I want to take title to anyway. So half the time when I make these offers, the other side objects, and of those times, half the time I can accept that rejection. But when I can’t, I say, listen, I don’t know. I may want to take a title with my wife. I may want to do an LLC. I haven’t decided who the buyer’s going to be yet. I don’t say that. I haven’t decided how I’m going to take title. So I just need that provision.
And when I explain it that way, generally the agent on the other side understands. But when there’s a language problem or when I think it’s a really good deal and I’m just trying to get the deal done, I can walk that provision back. Then we have the financing clause. I’m not going to really go into how the financing works. We can talk about that on an individual basis. If it’s a cash transaction, you check that box. I will say appraisals have to be done in the same time period. If you have 45 days for financing, that’s when your appraisal has to be done. That is a change as of December 21 in the contract. Before December of 21, the contract did allow appraisals after the financing contingency date, they’ve closed that loophole. I called it the appraisal, the backdoor appraisal contingency. So if you want to get out of the contract based on the appraisal, unless you have a standalone appraisal contingency, get that appraisal in during the term of the financing contingencies, closing costs in section nine, there’s some that are paid by the seller. There’s some that are paid by the buyer. And when where’s the check mark? I guess it’s on the next page.
Who pays title is a negotiated term. We talked about that on the show where we had Bob Schwartz recently that in Palm Beach County, the seller generally picks the closing agent. A lot of counties, I think, I forget if it is, 22 out of 63 counties are buyer picks. So a lot of counties in Florida I’ve come to realize are seller picks, but that is tradition. It is not a law or a rule, and it is highly negotiable. When I make offers, I like to pick the title company when I’m the buyer, because I like to skip op short to have that title work. I have trouble convincing my buyer clients of that though. Why would I have them incur a fee that isn’t normal? So I generally will not advise my clients one way or the other. I just generally pick in Palm Beach County, the seller chooses.
Staci Garcia:
But for getting your contract picked over other people’s contracts, getting your offer picked over other offers, it’s a really good advantage. So the seller might look at your offer and say, Hey, they want to pay for the title and all
Matthew Maschler:
Of this, right? I make a cash offer 30 day closing in this hot seller’s market. I offer to pay for the title. Maybe I offer that post occupancy agreement. And those are real, real reasons other than price that my offers will get accepted in bidding wars. So if you are losing bidding wars with other agents, if you have a signed agreement with other agents, I don’t want to interfere with any existing relationships, but there is a reason why the signature real estate finder team gets offers accepted and it’s not just who has more money. It’s these other terms. But yes, recently we made one and I knew the seller wanted to use their lawyer and I was going to be the buyer. And we went with seller chooses. And pretty much because I knew that the seller wanted to use their own lawyer. And when the seller got back, the seller’s lawyer got back to me.
They had a couple of changes to the contract. One of them was they said, usually the seller pays, but this seller wants the buyer to pay. And he tried to launch into how it’s negotiable. It’s not a rule. He was trying to defend the position. I was like, oh, absolutely. I go, that was my preference. The only reason I wrote it that way was because they wanted to use, I said the lawyer’s name back to him, they wanted to use this great lawyer that they knew named and I really named you. Named you. Maybe I shouldn’t have seemed too eager. That was funny. They
Staci Garcia:
Thought you were sick, right? They put you in
Matthew Maschler:
And he was a good lawyer. He got a fee shifted from the seller to the buyer. So he did his job. He’s going to charge the seller to represent them,
Staci Garcia:
But not do any work,
Matthew Maschler:
But not do any work. It’s fine with me now. I got Bob doing the title and he’ll do all the work. And then that lawyer, you, Mr. You lawyer, you, he can still charge a fee, but he’ll explain to the seller how it’s less.
Staci Garcia:
It’s less than they would’ve had
Matthew Maschler:
To pay it, less than they would’ve had to pay him had they paid for the title. They’re
Staci Garcia:
Saving
Matthew Maschler:
Money. They’re saving money. So that’s how he earned and justified his existence. Mr. Lazy lawyer. I wasn’t about to call him the F word. So yeah, sometimes I’ve had the situations where I was the buyer and I put buyer picks and then the listing agent gets mad. They’re like, no, this is Palm Beach County. The seller picks. I go, why would you want to incur that expense because it’s Palm Beach County? I’m like, yeah, but you don’t have to. But really that agent either didn’t know or they wanted to use their preferred title company. They got some kind of kickback.
Staci Garcia:
But also sometimes you know what? Who knows what’s going on at a title company that’s not your title company. And I’ve worked with title companies that I’ve said it before that I really, really like and trust. And the ones that I don’t know at all, I am nervous about. I go there and you end up there three hours, four hours going over paperwork and you don’t know if they did everything.
Matthew Maschler:
So then we get to some contract disclosures and paragraph 10 on radon and permits and molds and flood certificates, and nobody really reads these things until they have a problem with one of ’em. Permit disclosure, I don’t think I’ve ever read this Permit disclosure. So it does not know of any improvements made to the property which were made without required permits. Okay? Generally, I try to add a term that says the seller shall close open permits. I’m curious what happens if it doesn’t. But generally we try to add that term in. But again, when you’re trying to get your offer accepted over other offers, the cleaner the contract, the better I will say. Then the next page on page 12, you get to ferta the foreign investment in Real Property Tax Act. And that only comes to play when a non-US citizen goes to sell their property.
So if you get a listing, if your listing is not a US citizen, you should immediately Bell should go off in your mind to immediately consult ferta because it does take some amount of time to go through all of those loopholes. When you have time, when you get that listing agreement, you have time between listing. If you start the process, if it takes 45 days, let’s say if you start the process early, by the time you get pictures, get the property listed, advertised, offer negotiated and closed. If you start the process early, it runs simultaneously. If you’re a week before closing and you realize that these issues are out there, then you lost time. I had a deal where we were the buyer and the seller. It was listed for a year, and the seller didn’t take any actions that they should have to protect themselves.
They were Canadian. So all you Canadian sellers, be aware of ferta when you sell your property. Seller disclosure, I’ve talked about on the show before, the seller has an obligation to disclose all known material defects, and there’s no requirement that the seller fills out a seller’s disclosure. At Signature, we ask our sellers to fill out a seller’s disclosure. It’s to their benefit, it protects them, but there’s no requirement. And then we get into the inspection of the As is you have X number of days where the buyer can cancel for any reason or no reason at all. And that is a key of the, as-is contract, I like to call it as is with right to renegotiate. And some people get lost in the weeds of really, do we fix this in getting estimates? And at the end of the day, money solves these problems.
If you’re the buyer and there’s some issues, just try to get a credit from the seller. If you’re the seller, just try to provide a credit. If you’re getting in multiple quotes and multiple estimates and multiple opinions, you’re just wasting everybody’s time. I had a deal recently where the buyer roof was bad and it was disclosed. It was disclosed at the showing. It was disclosed all through the offers and then the negotiations. And then when the home inspector showed up and said the roof was bad, the buyers freaked out and they wanted a credit for the roof. And it was like,
Staci Garcia:
That’s opportunistic for
Matthew Maschler:
Me. It became real. They knew they had to put it in a new roof. They didn’t realize how soon they had to put in the new roof so it became real. So sometimes things that I think are easy, it’s new, right? You tell ’em it needs a new roof. They have to budget that. It needs a new roof. They offer a negotiation budget, it need a new roof. I thought we can get away with it for a years. Well, one thing
Staci Garcia:
That is an issue, supplies are low. So you have to order a new roof like months in
Matthew Maschler:
Advance, right? And then the contract provides for a walkthrough right before the closing. You want to do a walkthrough. It’s not an opportunity to do a full inspection. You want to make sure the property’s there. It hasn’t burnt to the ground that there’s nobody living in there, that the property isn’t basically the same condition as when you get it. And it’s important to do that walkthrough. As a seller, I don’t reach out to the buyer’s agent and say, Hey, when do you want to do the walkthrough? Because as a seller, I don’t care if the buyer doesn’t walkthrough, if the buyer doesn’t do the walkthrough, good. So sometimes as a seller, I don’t call and remind a buyer’ss agent of their rights, right? Hey, your inspection expires tomorrow. Do you have any demands? Hey, the closing is tomorrow at two. What time do you want to do a walkthrough? No, I do not mind if a buyer sits on their rights and lets their timelines expire because the day after the closing is not the time to say, these walls are soft like oatmeal.
This floor is covered in pubic hair. And then you get into the escrow agent and their rules, they’re going to hold the money. And then you get into what happens if there’s buyer default or seller default and dispute resolutions, and nobody looks at that until the time that that’s needed. If you have specific questions about that, that’s not when we go over the contract. But if you have specific questions as needed, I will go over that with my buyers. I’m just saying for the show, it’s not, buyers are really going to have to ask their questions, and I’m happy to sit with them. I love sitting with them. It could be over zoom or it could be in person and going over to these terms, I will do that all day long. But in 2022, everybody just signs and submits and they don’t really understand what they’re looking at.
So then you have the standards for real estate transactions, which again, nobody reads, but that talks about the survey, the title exam liens, force majeure issues. I had someone ask me a question recently of they had a contract to buy a house. It was new construction, I think they had 18 months to build it. It’s going to be delayed by 90 days. And the builder was trying to argue force majeure because of the coronavirus and the supplies are not available. And that’s really, really not what force majeure means. Well, force majeure means is if there’s a hurricane and you just physically can’t get to the lawyer’s office to sign, you broke your leg and you can’t get to the lawyer’s office. No, that is not force mare. If there’s one of those worldwide shutdowns, there’s a fire and you, if you’re supposed to close tomorrow and the closing agent’s office burns down, you’ll use the first majeure provision to extend the closing by a couple of days.
It won’t get you out of the contract. The closing will be done in the closing agent’s office, and it should be in the same county where the property is located. So because we live on the border of Palm Beach County with Broward County, sometimes a very, very close title company title agency, we’ll want to do the closing. And if everybody agrees, that’s fine. We’ll go a couple of miles into Deerfield, but they can’t make you go to Broward. Whereas they can make you go to Jupiter, even though a lot of closings are done online and virtual.
And then you have more standards stuff about 10 31 exchanges, which is interesting. We usually don’t see that in residential, but sometimes. And then you have your addends, your defective drywall, your lead paint disclosures. I can say that in this environment, I’ve not been doing all my disclosures on the initial offer because I want my offer to stand out and be accepted. And if it’s accepted, we could do our disclosures and our addendum after. But if someone’s getting 50 showings and 20 offers, I want to get my offer in quicker and lighter than everybody else’s. And again, when we sign the offer, we put the listing agent’s and the buyer’s agent cooperating agent’s name on it. Sometimes the cooperating agent tries to put in their percentage. It does not need to be there. And if it is there, it is not binding the percentage of compensation.
The offer of compensation is controlled by the MLS, and it is a code of ethics violation for an agent to try to use the terms of an offer to change the MLS offer of compensation. So please, please, please, agents, please do not do that. There are mold addendums, but again, you have an inspection period. It all could all be addressed during the inspection, lead paint and defective drywall as well. If it’s in an HOA or a condo, there’s certainly an HOA disclosures and condo disclosures condo, be very, very careful with, as a seller, you have to produce all the condo documents because the buyer has three days to review the condo documents and the buyer can cancel the contract within those three days. So if you don’t produce the frequently asked questions that are part of the condo documents and you’re close to closing, and then the buyer sees the frequently asked questions and sees the answer to one of those questions is something he doesn’t like.
No pets like no pets or no smoking, even though they probably know at this point, no pets, no smoking, no renting in the first year, even though they know this information from other parts of the contract, even though it’s not, or parts of the counter documents, even though it’s not new information. Producing that frequent asked questions does give the buyer the right to cancel the contract within three days of the disclosure. So make sure you get those documents. And a lot of times agents will ask for the originals. They’ll ask for the documents from the seller. Well, if the seller’s version of those documents are like 30 years old, they’re probably not current. So it’s very, very dangerous to get those documents from the seller. And I can’t tell you how many times agents say the buyer’s agents say, how come the seller doesn’t have ’em? How come you get ’em from the condo company, not from the seller? Well, you don’t want the seller’s dirty old documents,
Staci Garcia:
Dirty documents.
Matthew Maschler:
They’re old, they’re out of date. So I get new ones. I produce ’em on PDF, and then the other agent says, well, they’re PDF. You didn’t give me paper. You does not have to be paper can be PDF. So they would rather old out of date paper than PDF and whatever. So those kind of documents, HOA documents are different. You don’t have that same three-day right of cancellation upon receiving HOA documents. But do please read your HOA and your condo documents and make sure there are no restrictions to pets, smoking rentals that you’re unaware of. Vehicles,
Vehicles and parking. I’ve had, I have a customer who tells me he has his girlfriend’s car that’s parked overnight, keeps getting ticketed because she’s not supposed to park overnight in the guest spot. And I try to tell him that he’s going to have to add the girlfriend to his lease. He doesn’t want to do that. He doesn’t want to make that commitment to her, but he’s happy that she stays there. I said, listen, if she’s going to stay overnight, multiple, multiple times a week, even if we create a fake lease just to show the HOA, just to get her to the parking sticker, please, please, let’s do that. Let’s not fight the HOA over parking issues forever. That’s a weird way to end our contract review. But hopefully you learned something. I enjoyed going through that contract, the As is contract, Stacy, hopefully it was as good for you as it was. That’s great.
Staci Garcia:
Thank you.
Matthew Maschler:
And yeah, so ladies and gentlemen, if you have questions about Florida contracts or your purchase price or your purchase, please contact us realestate finder.com. And I’m matt@realestatefinder.com. And
Staci Garcia:
I’m Stacy Garcia stacy@realestatefinder.com. Email us if you have any questions,
Matthew Maschler:
And we’re recording this before Valentine’s Day. Please out there if you’re listening, if it’s before Valentine’s Day, please make your dinner reservations and your flower purchase orders while you can. If you hear this, it’s already too late.
Speaker 3:
The future looks bright and the stones pass by the sky’s dog. Blue. When it’s almost that time, light shows cameras flash when I pass living in the moment, forget about the past. They save the best for last. Matthew Mania. We about to make a splash. Life is a marathon full of sharp turns, got to keep pace while the hands on the clock turns five. I run a show. You could tell the electricity, energy vibrate. I’m always on time. Even if I’m, I make dreams come true. Living my life for you got a real clear view. If you don’t know the time I give you,
Speaker 4:
You knows. You know. You know what? It’s, you know knows. You know what? You knows it.
Speaker 3:
You know what time? Whose time? It’s what time? It’s Matthew. Man. The time says, you know what time, whose time? It’s, you know what time it’s, yeah. Got him shook, scared. Can’t look. We’re not afraid of the big bad wolf.