Residential Purchase Agreement - Part 1 August 12, 2024  Presenter: Iris Tonti

The meeting covered the disclosure regarding real estate agency relationships, emphasizing the different types of agency relationships and their responsibilities. The California Residential Purchase Agreement and joint escrow instructions were discussed, highlighting the importance of including all necessary forms and documents. Key points included the purchase price, close of escrow, initial deposit amount, and the need for strong initial deposits. The conversation also covered contingencies such as loan, appraisal, and insurance, and the importance of timely submission of forms and documents to avoid delays in the escrow process.

Transcript

https://otter.ai/u/BxcrZ-yPVqPZm48WdWEq6jJzuSk?view=transcript

Action Items

• [ ] Fill out purchase agreement form completely for next buyer client.
• [ ] Discuss timeline for loan approval and appraisal with lender.
• [ ] Instruct seller to install smoke alarms and complete minor repairs within 7 days.
• [ ] Submit all documents to escrow promptly according to specified deadlines.

Outline

Disclosure and Real Estate Agency Relationships

• Speaker 1 explains the importance of the disclosure regarding real estate agency relationship form, which is required for all listings and purchase contracts.
• The form describes different types of relationships, including seller's agent, buyer's agent, and dual agency.
• Responsibilities of the seller and buyer are outlined, and the form is also used for landlord-tenant relationships if the lease is longer than a year.
• Speaker 1 mentions that Patricia may require this form on leases, so it's important to check with her.

Revised Purchase Agreement and Escrow Instructions

• Speaker 1 discusses the revised California Residential Purchase Agreement and joint escrow instructions, which were updated in July 2024.
• The joint escrow instructions are crucial for ensuring all necessary documents are incorporated into the escrow instructions.
• The date prepared reference is explained, which indicates the day the document was prepared, regardless of when it is signed.
• The offer from the buyer is detailed, including the number of buyers and the address of the property, including the assessor's parcel number.

Agency Relationships and Brokerage Firm Confirmation

• Paragraph two of the purchase agreement confirms agency relationships, with parties acknowledging the receipt of the agency relationship form.
• The seller's brokerage firm and the buyer's brokerage firm are identified, along with their license numbers.
• Dual agency is discussed, particularly when the buyer's agent and seller's agent are from the same brokerage firm.
• Additional forms, such as the CAR form ABA for additional broker acknowledgment, are mentioned if more than one brokerage represents the seller or buyer.

Terms of the Purchase and Allocation of Costs

• Speaker 1 emphasizes the importance of reading the entire 17-page purchase agreement, especially for agents who are new to it.
• The terms of the purchase and the allocation of costs are specified, with the parties advised to read all pages.
• The purchase price, close of escrow, and initial deposit amount are detailed, including the importance of a strong initial deposit.
• The expiration of the offer is explained, with options for setting a specific date or a number of days after all buyer signatures.

Earnest Money Deposit and Increased Deposit

• The initial deposit amount is typically 1-3% of the purchase price, but it can vary based on the property's value.
• The earnest money deposit (EMD) must be sent to escrow within three business days after acceptance by wire transfer.
• Increased deposit amounts can be used to strengthen the offer, with the money going into escrow as quickly as possible.
• Liquidated damages only cover the initial deposit amount, so additional forms are needed for increased deposits.

Loan Amount and Financing Options

• The loan amount is specified, with options for FHA, VA, seller financing, or other types of financing.
• Fixed rates or initial adjustable rates can be set, with a cap on the rate to protect the buyer.
• Points paid by the buyer to obtain a better rate are included, along with a list of lender-required repairs for FHA or VA offers.
• Additional financed amounts can be included, such as financing 10% of the purchase price through the seller or another bank.

Occupancy Type and Seller Credit

• The occupancy type is specified as primary, secondary, or investment, with different interest rates for each.
• Seller credit can be requested, such as a $10,000 credit applied to closing costs or a one-year buy-down.
• The seller's obligation to compensate the buyer's broker is confirmed, with the seller paying the commission as stated in the form.
• Verification of all cash and down payment and closing costs must be attached to the offer.

Final Verification and Assignment Request

• The final verification of condition is conducted one day prior to the close of escrow, allowing the buyer to check the property's condition.
• The assignment request is discussed, with investors often using this to resell the home during escrow.
• The loan contingency, appraisal contingency, and investigation of property are detailed, with options to remove or waive these contingencies.
• The insurance investigation is crucial, especially in areas with high fire risk, to ensure the property can be insured.

Review of Seller Documents and Time of Possession

• The review of seller documents is conducted within 17 days after acceptance, with the seller delivering documents to the buyer.
• The time of possession is specified, with options for the seller to stay in the property for a certain number of days after the close of escrow.
• The seller delivery of documents is required, with the seller providing disclosures and other documents to the buyer.
• The sign and return escrow holder provisions and instructions are important for ensuring all necessary forms are returned to escrow.

HOA Documents and Smoke Alarms

• The seller must pay for HOA documents within three days after acceptance, with the documents delivered to escrow.
• Smoke alarms and carbon monoxide detectors must be installed at least seven days after acceptance.
• Evidence of representative authority is required if the buyer is purchasing through an entity, such as a trust or corporation.
• The importance of timely submission of all forms and documents is emphasized to avoid delays and issues during the escrow process.