Tag: under contract

Closings with Karissa: Contract Best Practices

The heart of any real estate transaction is the contract. It is the meat and potatoes.  Everything that the realtors, lenders and title company need to know to close a deal is in the contract and any amendments or addendums that follow.

Therefore, it is important to have everything that the parties desire within the transaction clearly outlined in the contract . This might include a seller credit or home warranty, Or if certain appliances are to stay or go with the seller. All these things must be included in the contract to set a standard of expectation. It also prevents incidences of: “Well that was my washer and dryer” and the seller running off with appliances the buyer is expecting. Or even worse: “That other lot was supposed to be included.” If it wasn’t on the contract, it won’t get conveyed.

 

Here are some helpful tips to make sure there are little to no issues when writing your real estate contract:

Identify the Real Estate

Know what you are selling. Even if all you have is an aerial from Google Maps with a hand drawn outline of what is intended to be sold and an address. Send that to your title company and ask for a preliminary report. In their search process, they will the correct legal description to include on your contract, preventing issues later with lots or tracts being omitted or included by mistake.

Identify the Parties

A preliminary report will include how the real estate is currently vested. So, if John and Jane Smith want to sell their house, the preliminary report will note that the property is actually owned by John A. Smith and Janice Smith (their legal names) or Jane Smith’s Trust.

The Buyer in the transaction will direct how they want to take title to the real estate on the contract.  The buyer might prefer to take title with first, middle and last names or just first and last.  Or they may request to take title via a trust or a company.  This should all be included on the initial contract or a follow up Addendum.

Set a Purchase Price and Terms

Agree on a purchase price. Once the purchase price is decided, set the terms. Who will pay closing costs to the title company, title insurance and any? Will there be a Home Warranty and who will pay that and how much? Is the Seller willing to offer a seller credit to help with the buyers closing costs? What stays and what doesn’t stay with the property? Never assume that appliances stay, even if it seems logical.

Pick a date to close

Closing dates can be very flexible and easily changed with addendums so long as all parties agree to it. Often contracts will state “on or before” and that just means that at any time before the stated close date in the contract the transaction can be closed if all parties agree. In the current market, unless it is a cash deal, give yourself, your client, and lender time and set closing out 30 to 45 days. Best practice is to avoid closing on the very first or last day of the month as these are the busiest days for closings, and it may be difficult to get the time you want unless you schedule early.

Ask questions

If something doesn’t seem right to you, ask questions! For Buyers purchasing or sellers selling a home this is a huge change and can be very tense. We understand the stress of each transaction and are here to help and answer any questions. Even if they seem trivial, we are happy to assist and walk you through the process, it’s our job!

 

 

 

Earnnest: the future of real estate transactions

Last March we introduced our partnership with Earnnest, a tool that allows for the fully digital transfer of funds (much like PayPal or Venmo) but made for real estate transactions! That means it was designed with safety and security in mind.

Earnnest provides a way for the digital transfer of client earnest money into the title company of your choice’s escrow account, verifies “good funds,” and distributes documentation of the payment and deposit to all parties.

How does it work?

The title company or the buyer’s agent can complete a request for earnest funds through the Earnnest app.  We are happy to complete this request on behalf of the realtor – just ask us!  In order to, we will need your buyer’s email, phone number, the property address, and the dollar amount. Your client will then receive a text and an email that “Tallgrass Title” is requesting funds.

     

Utilizing electronic methods of contract signing and delivery along with Earnnest allows your client’s new home to go under contract in minutes with zero travel and zero wire fees. The only cost associated with Earnnest is a $15 processing fee paid by clients when they complete the request.  With wire fees approaching $30 or $40, this saves you time and your client money.

What makes it secure?

Earnnest is partnered with the payment processor Dwolla, which sets up a secure connection between all parties with multiple levels of encryption. Earnnest uses Plaid to connect the buyer to their bank to complete the earnest money request and neither party obtains or stores your client’s bank account credentials or financial information.

It’s quick!

Once the buyer completes the request for earnest funds, all parties – the escrow company, the realtors involved, and the buyers – receive an email receipt verifying “Proof of Payment.” This tells us that the earnest money has been withdrawn from the buyers account, is verified as good funds, and is on its way!  Within 3 days, all parties will receive another receipt called “Proof of Deposit” – this tells us that the funds are officially in the hands of Tallgrass Title.  Contrary to how quick handing over a check seems, it isn’t always so fast.  Personal checks can take up to 10 days to clear the bank. Earnnest is the cleanest and quickest way to ensure the secure delivery of earnest money.

While entirely coincidental, adding Earnnest to our toolkit when we did was a gamechanger! Many of our everyday business practices have changed and we will continue to adapt as we move out of the Covid-era.  Adopting cutting edge tools for secure and paperless transactions will continue to be our standard.  We’re happy to utilize PaperlessCloser, CertifID, Dotloop, HelloSign, Earnnest, and another nifty product we’ll share with you in a couple of weeks that is going to make mobile transaction information and document access a reality.

Earnnest has even more to offer than we can cover here, if your curiosity is brimming, give us a call! Or you can check out Earnnest here! And if your client wants to complete their earnest deposit through Earnnest, we’d be happy to place the request for you or show you how!