Buying or Selling a Home/Funds Necessary to Close

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Expert: - 12/12/2009


Question
Hi Todd i am currently trying to buy my first home. I already made an offer and seller accepted. My financial needs for the down payment and closing costs are going to be coming from a withdrawal from my employers 401k plan. My question to you is, If i sign home contract tomorrow but am still waiting for 401k withdrawal to be approved, if for any reason its not approved am i already committed to this home purchase? Or when will i be committed incase they deny me and i now have no money to buy this house?

Answer
Hello Kevin - Immediately upon Seller acceptance of your offer, and depending on the terms of the contract, it is highly likely that if you 'fail to have the proceeds necessary to close" you would be considered in 'breach' of the contract and subsequently your earnest money would be forfeited to the seller. However, you could creatively write additional terms into the contract that would allow you to receive a refund of your earnest money should the 401k plan not materialize. Such as... "this sale is subject to and contingent upon the buyer obtaining the funds to close from a 401k plan. Should the Buyer be unable to obtain a 401K approval letter within 10 days of contract acceptance this contract shall be cancelled and all earnest money refunded to buyer"... Understand that either should an REO/Bank Owned or Short Sale Seller receive an offer with such a contingency (additional terms) they will probably overlook your offer for an offer without such terms. Although there is no standardization for residential real estate purchase contracts nationally, each state's local association of REALTORS usually provides a document for the REALTOR members to use as a 'standard of care' which provides significant protection over the use of forms typically available online for free or purchase. I recommend that you contact either a local REALTOR or a real estate attorney in the state in which the property to be purchased is located to ensure your rights, obligations, and exposure with regard to terms and conditions associated with failing to have the funds necessary to close. I am not a real estate attorney therefore this is not to be considered legal advice rather this is real estate information any experienced REALTOR should be able to provide. I hope this has answered your question to your satisfaction. Please reply if you have any further questions. - Todd

Buying or Selling a Home

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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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