I had an incident yesterday that just confirms to me how important it is for every agent to make sure their paperwork in filled in properly. I'm an easy going and friendly agent but I learned long ago you can't rely on other agents admitting to mistakes or having the integrity to stand up and take the blame for their mistakes. Most often it turns into a big argument that both wish had never happened.
I'm the buyers agent and we are just finishing up an escrow. Since this is a bank owned property there has been a fair share of back and forth, mainly due to paperwork. In a nutshell the listing agent plainly states in the MLS... Commissions will be based on the sales price minus any closings costs paid by the seller for the buyer. This is common.
I write the purchase contract and my buyers do not ask for any closing costs. Closing costs are normally considered escrow fees, lender fees, taxes and so on. The listing agent tells us the well pump doesn't work. In order for the well to be certified the well has to work. I put that in the contract. (In California well certification and septic certification are common and regular fees the SELLER pays) I also ask for a septic cert. I decide to throw in a home warranty. Usually banks don't pay for this but it doesn't hurt to ask, after all we're going to get a counter offer anyway.
So we go back and forth with different issues in the contract and finally everything is agreed upon. For well and septic they agree to pay but put a limit to what they will pay (common) and of course it goes over by about $100. No big deal because I've explained this to my client ahead of time.
So now we're ready to close, all the repairs and certs have been done, the appraisal came in for $30,000 more than my clients are purchasing the house for (this normally doesn't happen) and my clients are thrilled. Suddenly escrow is calling me to tell me the bank won't sign the HUD (estimated closing costs figures) because the well and septic are closing costs paid by the seller for the buyer. WRONG!!! No where in the contract that I wrote did I put these items as closing costs. So, now the listing agent tries to explain that in a Bank Owned transaction these items are considered closing costs and are deducted from the purchase price WRONG AGAIN!!! If these items were considered closing costs by the bank then they should have addressed the issue and stated this plainly in the contract before they signed. Unfortunately this was never even disussed until the last minute and now it's too late. By the way, this issue has it's own section in the lenders addendum, which all banks provide to their buyers and it's suppose to tie up loose ends like these. They didn't add these items to their own addendum. So in this case the listing agent will eat the difference in commission. She didn't do her paperwork correctly and so she was penalized. Luckily, the difference wasn't much but it will serve as a lasting reminder to make sure the contract is explicit, you can't leave anything up to interpretation because everyone will interpret it differently. And by the way, my clients got the home warranty, later the agent tried to argue this too was a closing cost paid by the seller for the buyer. That didn't work either.
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