RESOLUTION OF DUE DILIGENCE ADDENDUM

Happy Friday Red Rock Agents,

It’s Spring for sure, had Snow on the ground earlier this week and now it’s 75* outside. This is the weather we pay for in July and August so just soak it up. I know that some of our central agents are coming down this weekend for baseball tournaments, please enjoy it. Now that we have Red Rock agents across the State please use them for referrals when you can. It’s always nice to refer our clients to people we can trust. Same for Northern agents, send your people to us and they will be well taken care of.

Only one item I want to go over this week and it’s the RESOLUTION OF DUE DILIGENCE ADDENDUM. This is an interesting addendum with many moving parts. Sao, you have read this addendum carefully and I know that you have, right? If not pull it up and review after this email. Section 1 of the addendum (CLOSING COST) goes over a closing cost contribution (to be applied at Buyer's discretion). It goes on to list mortgage costs, reduction of loan interest rates, etc. It also states that any unused portion at buyers’ option, may be used to reduce the purchase price. Here is the kicker that I feel many agents haven’t read. (If in a prior addendum to the REPC Seller has agreed to pay an amount towards Buyer’s closing cost (the “Prior Contribution”), the amount shown in this Section 1 above, shall be in ADDITION to the Prior Contribution.  So, if in the original offer the buyer asked for $5,000. in closing costs, and in the Resolution of Due Diligence addendum asks for $5,000. more the total of sellers closing costs contribution will be $10,000. Be very much aware of this.

Section 2 of the same addendum PURCHASE PRICE REDUCTION. Seller and buyer agree that Buyer accepts the Property as provided in Sections 10.2 and 10.3 of the REPC and that the Purchase Price shall be reduced, and the NEW Purchase Price is $____________. This is not the place to write in the amount of the reduction, it is the NEW PURCHASE PRICE that needs to be filled in. I have seen it change the purchase price to $5,000. due to agents not reading the section completely or not at all. Be cautious.

So, if you have put any amount in Section 1 or 2, will Section 3 still apply? NO, any issues have been addressed in section 1 or 2 by CLOSING COSTS or PURCHASE PRICE REDUCTION, and the seller accepts, the Resolution of Due Diligence has been accomplished.

Section 3 is straightforward REPAIRS TO BE MADE BY SELLER. Please note that it doesn’t say “may” be made by the seller. Please don’t send the entire inspection report to the seller just the pics and items to be addressed for repair. If you wonder why please call me and I’ll explain. It would take too long to go over it in this email.

Section 3.1 (A) and 3.1 (B) BUYERS REMEDIES FOR UNFINISHED REPAIRS. If 3.1(A) is marked and the repairs are not finished by settlement, buyers can cancel and get all their earnest money back and damages of an amount the same as the earnest money. In other words, it’s SELLERS DEFAULT as addressed in Section 16.2 of the REPC. Section 3.1(B) states that the buyer can move forward and then sue the seller for money lost.

That brings us to Section 4 DUE DILLIGANCE CONDITION and that tells us this. Upon acceptance of this ADDENDUM, Buyer’s objections to the Due Diligence shall be deemed resolved and the Due Diligence Condition IS waived by Buyer unless checked below.  Now that leaves 4. (A) Buyers Due Diligence Condition IS NOT waived. If you check that, will the Due Diligence Deadline Date still be in effect? Yes, Allen and I believe that the deadline date is the date due diligence ends, in this case. My question is this? If the addendum is accepted, then why would you need to continue Due Diligence? I understand that buyers’ agents feel like it still protects the buyer. If I represented the Seller, I would counteroffer that addendum and remove the Section 4 (A). from the contract if it’s checked. Please call me, Allen, or Michelle if you have questions. This addendum can be confusing. I hope this long broker bit helps.

Please have a great weekend and be safe out there,