Buying or Selling a Home/contracts

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Expert: - 1/28/2009


Question
I wanted to buy a 1948 home but I did not want to buy it without a home inspection.  The realtor advised me not to get a home inspection as the house would not qualify for a FHA or conventional, one of these. She told me that I would just be wasting my money because I already knew that the house needed leveling and repairs.  I don't know about the plumbing or the electrical stuff.  I really can't tell the condition  of the exterior as it has siding.  The house on the inside needs to have the floors replaced and the windows also need work as they are the original windows.  I signed the contract but didn't give the earnest money because I didn't have it at that time.  She told me that the contract would only be valid if I deposited the check in their box by midnight.  I did not want to do this before consulting with the experts.  What should I do?  I want the house, but why wouldn't the bank qualify me for the sale?  Or why won't one type of loan, which is the lower interest rate be available?  I want the home inspection, even if it  is going to cost me $350.  

Answer
Hello Esther - Every home purchase should include a home inspection, PERIOD. This is the key ingredient of a buyers opportunity, and due diligence, to ensure the property condition from an expert in investigating property condition. There are a number of items a home inspector evaluates such as heating, air conditioning temperatures, electrical loads and continuity, GFI, potential plumbing concerns, roofing issues, pool items, and the like. This is an instrumental part of the purchase process. Other items of concern in a home of this year is MOLD and Hazardous materials such as lead-based paint concerns. You should also request an investigation into these potential concerns as well. Obviously you are an investor otherwise I would challenge your interest in purchasing a property which requires such extensive repair. Even as an investor you still have an obligation to be diligent in your quest to investigate any concerns you may have with the property. NEVER purchase a home, or anything, prior to satisfying your concerns whatever they may be. Earnest money is not a requirement in many states for an offer to be valid. It is typically required only if the seller demands earnest money as earnest money is provided for the purpose of satisfying the seller for damages in the event of a buyer breach of contract. You will have to review your offer/contract for terms of breach and seller damages. Earnest money is usually applied to buyers HUD-1 settlement (buyers costs to close)... it can also be returned to the buyer if the buyer does not need to bring funds to the closing. Financing and loan guidelines are different for every lender. This means there is no standard... due to the current economic issues lenders are under significantly greater scrutiny with regard to whom they lend, credit scores, and in the case of FHA or VA Loans the property must qualify as well as as the borrower. Basically, if the property needs too much work, even though you may qualify for this home, it is likely with the significance of repairs you indicated, the property may not qualify. SO, you have to ask questions of your REALTOR as well as your Loan Officer to ascertain what is going on... and continue to ask questions until you understand exactly what is happening. If you cant get your answers from them ask to speak to their superiors. Don't stop until you get your answers. I hope this has helped and I apologize for the delay in my reply. Don't hesitate if to reply if you have additional questions. - Todd

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Todd C. Menard

Expertise

National Association of Realtors Code of Ethics and Professional Standards * Contract Questions: 05/05 Arizona Real Estate Purchase Contract, Exclusive Buyer Broker Contracts, Listing Contracts and associated contract documentation as it relates to boilerplate, covenants, contingencies, procedures and procedures. * ARMLS Arizona Regional Multiple Listing questions * Real Estate Professional Standards and Practices, Ethics, Obligations, Duties * Agency relationships in Arizona, Procurring Cause * Questions typicaly arising during the listing period * Questions typically arising during the escrow period * Questions about working with a real estate agent/REALTOR * Questions Related to New Home Builders

Experience

National Association of REALTORS Board of Director (2011) Arizona Real Estate Salesperson License (1991-1995), Arizona Real Estate Brokers License (1995-Present), Arizona Association of REALTORS Board of Directors (2008-Present), Arizona Association of REALTORS Professional Standards Committee (2008-Present), AAR Certified NAR Code of Ethics and Professional Standards Instructor, Southeast Valley Regional Association of REALTORS President-Elect (2011) Southeast Valley Regional Association of REALTORS Board of Directors (2008, 2009), Southeast Valley Regional Association of REALTORS Grievance Committee Chairperson (1998-2007), Southeast Valley Regional Association of REALTORS Bylaws Committee (2008-Present), Southeast Valley Regional Association of REALTORS Education Committee (2008), Arizona Association of REALTORS Forms Committee - Residential Purchase Contract (2005), Arizona Association of REALTORS Forms Committee - Residential Rental Agreement (2008), Arizona Association of REALTORS Forms Committee - Buyer Broker Agreement (2009), Arizona Association of REALTORS Presidents Advisory Group, Road to Professionalism (2009), Arizona Association of REALTORS GRI Curriculum Review Committee (2009), Arizona Department of Real Estate, Commissioner's Education Advisory Group Sub-Panel B (2010) Arizona Department of Real Estate, Commissioner's Statute and License Review Committee (2007)

Organizations
National Association of REALTORS, Arizona Association of REALTORS, Arizona Real Estate Educators Association (AZREEA), Arizona Regional Multiple Listing System (ARMLS), American Notary Association, Southeast Valley Regional Association of REALTORS (SEVRAR), Southeast Valley Regional Association of REALTORS Women's Council of REALTORS (2010-Present), Phoenix Association of REALTORS (1994-2000, 2005-2009), Scottsdale Association of REALTORS (1994-2000, 2005-2009), Maricopa/Glendale Association of REALTORS (1994-2000, 2005-2009),

Publications
"Real Estate in 2008"- Lifebushido Publishing (Contributory Author), SEVRAR Magazine, Internet Crusade, RealTown ListServe, Blogger.com, Active Rain

Education/Credentials
- AAR Certified Ethics and Professional Standards Instructor, Graduate REALTOR Institute (1993), Certified Negotiation Expert (CNE), Over 100 Hours of annual real estate continuing education, Annual Ethics and Professional Standards Development Workshops as required by the National Association of REALTORS, Approx. 36 hours of NAR Code of Ethics training annually, Numerous IDW, Seminars and Train the Trainer programs, Business Management Degree - 1981

Awards and Honors
2009 REALTOR of the Year Award, Southeast Valley Regional Association of REALTORS (10,000+ Members), Double Platinum Production Award ($45,000,000 Sales Volume)- Keller Williams Realty Int'l (2001), Top 15 Sales Production Keller Williams Realty International (2001), Top 5 Sales Producation Keller Williams Realty Southwest Region (2001), Top Recruiter Award - Keller Williams Realty Int'l, SW Region (2002), Who's Who in U.S. Executive (1983), Who's Who in U.S. Real Estate Professionals (2007)

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