Beware of the contracts!
This weekend will mark the biggest change in the history of real estate and yet, many are either unaware or unprepared. The NAR settlement is here, and this weekend the contracts entered into will be the first to fall under the new agreement. My issue remains the lack information and structure around how the contracts will be written and the potential issues around specific verbiage that may or may not be used.
For many, the new agreement will have virtually no impact regardless how the contracts are written; but for those who will be making minimum downpayments and/or requiring a seller’s contribution toward closing costs, the specific language can be the difference between success and failure of the transaction.
The mortgage industry has led the way regarding the NAR Settlement in quickly responding across the board by letting the markets know that they will accept language that states the seller is allowed to pay the buyer’s agent commission without holding that payment against the standard allowable seller’s contribution toward closing costs. However, the burden of the language is upon the preparer to navigate. To be clear, a seller’s contribution is NOT the same as the seller agreeing to pay the buyer’s agent fees. The preparer must be certain to define the difference. Another critical point is that IF the buyer must pay all or part of their agents’ commission, that money may NOT count toward their required buyer’s contribution towards the transaction. With no specific direction from NAR or the real estate boards and given that with some markets that use attorneys while others have the agent prepare the offers and contracts, it is imperative that we remind our clients and referral partners to know that contract language matters!
In other news this week, both CPI & PPI were pretty much as expected and the rate market trend is toward lower rates; SLOWLY! Today we have weekly initial and continuing claims. If the numbers are as expected, there should be much of an impact in bond prices and for rates to continue to slowly improve as the markets eye a FED rate cut in September. However, a surprise is always possible.
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