Chapter 8 DQ (Contingent Transactions)

Discussion Prompt:Chapter 8 provides an overview on contingent transactions. This includes how contingencies work (termination or removal, good faith effort required, basic elements of a contingency clause), types of contingencies (financing/ appraisal, inspection, sale of buyer's home, purchase of replacement property contingencies, as well as other types of contingencies), and unfulfilled contingencies (notice to perform and canceling the purchase agreement).

Most transactions are contingent with the usual inspections and financing contingencies. If you have a cash buyer, the financing contingency will not be a part of the contract, yet the cash buyer may still want the appraisal contingency (although less common). Recently, I had a transaction contingent upon my client selling her home first. These types of transactions are more difficult as most sellers prefer to receive an offer not contingent on the sale of buyers home. There are many factors that can affect the outcome and it's just more risky to accept these types of offers. In order to get the seller to agree to my clients offer, I had to first get my clients home on the market with professional photography, staging, at market price (only one chance to make a great first impression eliciting immediate offers). Once my client's property was listed on the MLS, I then wrote up an offer on behalf of my clients along with a letter to the seller explaining why my clients are the perfect buyers for the home. Once their offer was accepted, it was game on. We had 17 days to find a buyer and get them into escrow on my client's house all the while fulfilling her part of the contract on the purchase side. Thankfully, it all worked out for my clients and they are now enjoying their new home.

After perusing the chapter, consider the two scenarios below in regard to1) seller, 2) seller's agent, 3) buyer, and 4)buyer's agent. Discusshow the problem in each scenario should be dealt with and how the Request for Repair form (shown in the textbook) would befilled into reflect the different possible courses of action. How could the partiesnegotiate a final resolution for each scenario?

Scenario1: An inspection report indicates that there's some water damage inthe garageand laundry room. It's not completely clear whether this was causedby aleak from an appliance or hose, or whether there was a past problem withthe roof. (The roof is 15 years old, but the seller has only owned the home forfive years.) The inspector is unable to make a clear determination about possiblemold problemswithout removing the wall.

Scenario 2: An inspection report indicates that there has been a termiteinfestation inthe property, which is common for this area. The home is eight years old,and itlooks like the bulk of the damage done so far is in the deck and the garage.The buyer was planning to tear down the garage anyway, to add on arecreation roomfor the home and build a larger garage.