Be careful about what your Realtor puts in the earnest money contract.
Keep in mind the buyers mortgage underwriter will scrutinize the contract.
…and, sometimes what’s written in the contract can get you in trouble with the underwriter.
Here’s a true example…
On a purchase contract I saw recently the Realtor made the mistake of mentioning that the buyer was getting a home inspection in the earnest money contract.
…she wrote it in the special provisions section.
Typically the home inspector will go out of his way to let the buyer know about every little light bulb and air register that has any type of imperfection in them.
His goal is just to let the buyer know about them, and to cover his own bases if something were to happen to these items in the future.
The home inspection is typically a private report meant only for the buyer’s eyes.
Once the word “inspection report” shows up in the contract the underwriter can ask to see a copy of it.
Sure enough, the underwriter asked to see the inspection report.
…and, the underwriter wanted every little item listed on the report to be fixed prior to closing.
This of course caused the need for renegotiation on the repairs, and very well could have killed this deal.
Fortunately the seller was willing to cooperate with the buyer on the repairs.
The lesson here is don’t mention the inspection report in the contract – unless you don’t mind showing it to the underwriter.
That’s it for today!
Have a good day today! …and thanks for reading.
Brett
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