Posted on September 20th, 2016 No comments
To Sign or Not to Sign the Arbitration Clause in the Residential Purchase Contract
The Arbitration Clause in the Residential Purchase Contract (RPA) in Southern California is the only section of the contract that may not be agreed upon by buyer and seller and yet you still have a fully executed contract. Most buyers’ agents tell their clients to sign this clause without fully understanding it, and without fully explaining it.
The Arbitration Clause comes into effect if buyer and seller have a dispute, and mediation does not work. Mediation is compulsory, but not binding. This mean that if there’s a dispute between buyer and seller, they must go to Mediation. However if they don’t like the result, they don’t have to adhere to it. Arbitration, on the other hand, is voluntary but the decision is binding. There is no jury in an Arbitration, and you can’t appeal a decision. The upsides are that it’s much faster and much less expensive than going to court.
What a lot of agents don’t tell their clients is that you don’t have to agree to Arbitration at the time you sign the offer. Both parties can always decide to go to Arbitration at a later date even if the clause is not signed. In fact, my broker, RE/MAX Estate Properties has been instructed by our E&O insurance company not to sign the Arbitration Clause in a listing agreement for this very reason. The E&O company wants the flexibility to decide at a later date if there’s a dispute between the Broker and a seller.
Many agents go on auto-pilot when it comes time to sign the contract. They see a blank line for a signature and they assume it needs a signature. Make sure to ask your agent more questions. Ultimately the decision is up to you, but your agent should be giving you the information to help you make these decisions.
Posted on September 14th, 2016 No comments
What you need to know about termites
Termites are a fact of life in California. Without the cold, harsh winters, termites are able to thrive. Here are some things to keep in mind when it comes to termites whether you’re buying or selling a home:
1. It takes approximately 8 years for termites to rear their ugly heads.
2. Even if you’re buying new construction, it’s possible to have termites. They have no problem taking residence in wood at the lumberyard.
3. If there is serious infestation, you will need to fumigate your home to rid yourself of termites.
4. Most termite companies outsource their tenting which results in a marked up price for the homeowner. There are companies who do the tenting in-house which will save you money so don’t be afraid to ask!
5. There are non-toxic treatments but at the end of the day if you have a full infestation, fumigation will most likely be the only way to get rid of the little buggers. The company will still recommend fumigation as the number one treatment, and the non-toxic alternative will only be a secondary treatment without the same warranties most likely.
6. How termite treatments are being negotiated in a real estate purchase contract has recently changed in southern California. Just about two years ago, buyers would ask sellers to handle Section 1 termite items in the offer before there was even a termite report on hand. But now, termite work has been grouped with all other possible repairs. Buyers typically negotiate termite repairs at the same time they are requesting other repairs based on the home and other inspections. What this has successfully done is take termite treatments off the lenders’ radar. And now the lender doesn’t have to require fumigation prior to funding, and the seller won’t be forced to move out early or leave for 3-4 days during tenting and then return to move out again.
Have more questions regarding termites, tenting, and negotiating them in a real estate transaction, feel free to contact me!