There is Nothing RUDE About Operating Per the Real Estate Contract

Real Estate Agent with Long and Foster REALTORS®, Gainesville, VA VA License # 0225089470

There is Nothing RUDE About Operating Per the Real Estate Contract

The other night in our office bull pen, there was a lively discussion about whether or not a Bristow-Gainesville Listing Agent should advise their sellers to deliver notice to their buyers when the financing contingency has expired.  You see, the way our local real estate contract works is that a buyer has a financing contingency, that sometimes includes the appraisal, and there is a certain amount of time for that financing to be approved.  Most financing contingencies would probably be about twenty-four to thirty days.  If they aren't voluntarily removed and are not called by the sellers, these contingencies continue up to settlement.

Why would leaving a financing contingency in place be a big deal?  Well, if a buyer is having an issue with their financing, sellers would rather know sooner, rather than later, correct?  And if a seller never called the financing contingency, even if the financing blew up the night before closing, the buyer could reasonably expect their earnest money deposit to be returned to them.  For a seller who has spent a month or more off the market, you can see where there would be some hard feelings when there is no recourse with regards to retaining the earnest money if a buyer is able to void the contract under their financing contingency, right at the settlement table.  That is why leaving a financing contingency in place is a big deal.

When it comes to the method for removing the contingency, spelled out in the financing contingency itself, some buyers, taking the lead from their agents, find the delivery of a notice removing the financing contingency offensive .  A seller is to deliver a written notice that the financing contingency has expired.  Once that notice is delivered, the buyers have three days to void the contract or everything goes on as planned, minus a financing contingency protecting the buyer's earnest money deposit, and the parties proceed to settlement.  If something blows up with the buyer's financing after that contingency is removed, the seller is entitled to the earnest money, if there aren't any other contingencies protecting it.  Simple.  

Buyer agents will scream, "Why did you send that notice to my buyer's email?  They were at work."  Well, per the contract, you Mr. Buyer's Agent, had deemed that for a document to be deilvered to your buyer it had to be directly to your client's email.  It's right there in black and white.  If you hadn't written their emails in the space for delivery, and your own instead, it would have come only to you.  

Or sometimes buyer agents get bent that you, as a professional listing agent, did something no other listing agent does.  "Why did you send this?  No one else does?"  Well, just because other listing agents don't adequately protect their sellers doesn't mean that's how I operate.  When I have seller clients, they are advised how the financing contingency works, and what role they must play in removing it if a buyer isn't willing to remove it voluntarily.  Some sellers aren't up for it, but for those that are, this listing agent is going to follow the road map set forth in the contract.

Just my opinion, but if buyer agents really cared to read and understand the contract, they may fill in some blanks differently.  They may also advise their buyers that a notice may arrive when the financing contingency has expired.    Not doing either and acting put out that the sellers in a deal decided to exercise their contractual rights to remove a financing contingency is unprofessional.

The best business practice always starts with the simplest question.  "What does the contract say?"   If the contract allows the buyer's financing contingency to remain in place unless it is called by the seller, why are buyers shocked when a seller makes a perfectly legitimate move to remove it?  Beats me.  Then again, I know the contract like the back of my hand.


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how does a financing contingency work in a bristow va real estate contract

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Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

Makes me nuts when agents list the principal ONLY in Delivery, then get upset when I follow the contract.  And, if the terms of the contract are not followed, why have them in the contract? Professional real estate agents know the contract and follow it.  Everything else is just noise.

Apr 28, 2018 05:14 AM #1
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Love your title line, Chris Ann.  And, it spells out why adhering to the contract is what it is all about!

Apr 28, 2018 11:03 AM #2
Curtis Van Carter
Better Homes & Gardens Wine Country Group - Yountville, CA
Your Napa Valley Broker Extraordinaire

WOW Chris Ann

I could go on about 3 times as much as you have here trying to explain these nuisances and contract terms. In the end, it is what to do best for our clients and if the other party/parties don't understand that, then maybe this is not the best deal for them. cheers cvc

Apr 28, 2018 12:27 PM #3
Liz and Bill Spear
RE/MAX Elite 513.520.5305 - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Whuttttttt?  You expect other agents to know the actual wording and intent of the legal document that is used to buy and sell homes.  That can't be something you can reasonably expect agents to actually do before advising consumers in the biggest purchases of their lives??? Pshawwwwwww.  :)

Apr 28, 2018 08:26 PM #4
Curtis Van Carter
Better Homes & Gardens Wine Country Group - Yountville, CA
Your Napa Valley Broker Extraordinaire

Chris Ann

I just re-read this and it is as good as the first reading in explaining the importance of sticking to the terms of the contact, especially the financing ones. cheers cvc

May 01, 2018 08:07 AM #5
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

This is interesting, Chris Ann. I, too, send out Notices to Perform, but ours in California allow the seller to cancel, not the buyer. I get pushback from agents who don't understand why we need all 3 contingencies released. It's not just following the contract, it's good risk management. I never want to be in a court where the judge asks: why didn't you demand the release? We send notice the day before. The day it is due, we send another notice. By that afternoon, they get a Notice to Perform. But so few agents do this.

May 01, 2018 09:20 AM #6
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Chris Ann, we have a mantra in the office. It's "What does the contract say?" Our office has a home-buying timeline that we follow religiously. If a buyer is getting close to the line of a contingency, we follow up and find out what's happening. If everything is going well, but maybe off a day or two, we rarely make a big deal out of it as long as it's progressing. If there are issues, we definitely ask for answers and clarification. Nobody wants to pull the plug on a deal, but if it's not going to happen, there is no reason to continue down a hopeless path. 

May 04, 2018 08:22 PM #7
Yolanda Cordova-Gilbert
Sitterle Homes - Richmond, TX
Sitterle Homes

Chris Ann,

     I think the financial contigency is a good idea, this is not child's play this is serious business and it is your fiduciary duty to protect your client!

May 05, 2018 12:39 PM #8
Curtis Van Carter
Better Homes & Gardens Wine Country Group - Yountville, CA
Your Napa Valley Broker Extraordinaire


Just dropped by to wish you a glorious Sunday. cheers cvc

May 06, 2018 06:54 AM #9
Nina Hollander
RE/MAX Executive | Charlotte, NC - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Hi Chris Ann.. the NC contract has no financing contingency, so that makes it easy for us... but separate from the fact that there's no rudeness involved in meeting the terms of a contract, from a liability standpoint, it's always better to have your bases covered. As we all know, if you don't put something in writing it might be deemed not to exist!

May 06, 2018 09:19 AM #10
JL Boney, III
Coldwell Banker - Columbia, SC
Columbia, SC Real Estate

If buyer agents will simply explain to their buyers that will likely get a notice from the sellers, then there's nothing to be offended by. The contract is in writing for a reason, we have to explain things.

May 06, 2018 02:16 PM #11
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Chris Ann Cleland

Associate Broker, Bristow, VA
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