The Settlement and Other Expenses Paragraph of TREC contracts contains a provision for the seller to pay a buyer’s closing costs. Paragraph 12A(1)(b) includes a blank for a number that caps the amount of buyer expenses the seller will pay. This amount would be in addition to any amount the seller must pay as seller’s expenses.
This paragraph also specifies an order in which funds are to be applied, starting with expenses the buyer is prohibited from paying by FHA, VA, Texas Veterans Land Board, or other government loan programs. Only after amounts to those entities are paid can funds be applied to other buyer closing costs, first to prepaid items and then to the buyer’s other expenses. Paragraph 12A(2) lists the expenses the buyer is responsible to pay. Note that buyer expenses paid by the seller must be allowed by the lender. If there is any balance remaining after payment of the buyer’s expenses, or payment of expenses allowed by the lender, that amount would not go to the buyer.
What if the lender asks the buyer to double the home warranty cost (do a two year home warranty vs the one year the seller agreed to under the paragraph that specified the agreed by all parties amount)?
Why would a lender care about the residential service contract (home warranty)? I’ve never encountered that. Having said that, simply double the amount in paragraph 7 H specifically dealing with residential service contracts.
Also what if the lender offers discount points on top of the 2yr home insurance. What about home warranty cost that can be rolled in. This isnt so cut and dry its easy for them to use concessions up. You should also be examining the place where you can add the commission to the contract as of now it sates the mls dictates but we should now be able to write it into an offer as a commission percentage or flat fee. That way its partially separated and negotiable in the offer too. You should also examine BA forms to… Read more »
TREC and Texas REALTORS are already looking into that regarding forms. Just remember the purchase contract is for performance between a buyer and seller not agent pay… those are handled through the listing agreement and the buyer agreement As far as the home warranty it says buyer shall purchase and seller shall reimburse so you can do whatever you can negotiate. It is true the loan may have some fiscal investment requirements of the buyer to have their own money and if everyone is paying something it may not work. The lender may have the final say how much can… Read more »
It states the commission is dictated by a separate agreement and then gives examples. It DOES NOT state the MLS dictates the commission. Commission negotiations should not be part of a contract where the broker is not a party to.
In this current market environment this information is very useful.
Many lenders will ask you to write in special provisions that a certain amount in 12a2 is to be applied towards rate buy down points. Just saying.
This seems very messy to me. And potentially more lawsuits. And there’s so much gray area in seller, concessions, etc. I know we need a buyers rep agreement and the listing agreement but how is this gonna all unfold and work out in a clean manner?
It is going to be very messy and ultimately going to lock some more buyers out of the market if sellers don’t agree to pay the buyer agent commission. Most buyers under 500K don’t have a lot of liquid cash in order to pay their own agent. The whole thing is ridiculous and I don’t see how it even made it to the final court. The only winners are the attorneys.
The very people, including a certain guy in Washington, saying this settlement will help Americans better afford homes, are wrong, as the exact opposite is going to happen as you say, unless NAR and all the State Commissions find a way for the BAC to be paid in such a way, that it will NOT burden the buyer….PERIOD.
In Para 12(A) 2 is does not state anything about commissions. It is very specific about the charges that can be paid. Attorneys say that this is a contract between buyer and seller only. The agent or his commission is not part of the transaction. How is this going to be handled? Will it have to be thru a Broker to Broker agreement?
I look forward to the resolution for this issue. It will be interesting.