Responsibility on the listing side…
Last week’s Rain City Guide discussion on Short sales got me thinking about some of the other things that are occurring in this market as well. Many homeowners have taken out a ton of equity and are either maxed out or upside down at this point, but some may not be aware of exactly how much they owe. When it comes to listing these properties – or any property, the listing agent should pull title, but also talk to the title rep and find out how much the property is monetarily encumbered by liens. Merely relying on the seller’s information is not enough to be truly diligent.
Take a seller who thought he owed X amount of dollars on his home. After being on the market for a while, the seller’s agent relied on that information to help when it came to reducing the price. A buyer came along and a contract was executed for the purchase of the property. One week before closing the listing agent calls the buyer’s agent and drops the bombshell: The seller actually owes quite a bit more than they thought. Instead of getting a nice chunk of change from their seller net proceeds, the seller will be short X amount of money to close.
Does this really happen?
You bet! Twice I have seen this happen personally and both times the listing agent had not bothered to check the actual amounts owed on the properties. Yes, a listing agent should be able to rely on the seller’s information, but as a matter of diligence shouldn’t they go ahead and take the extra step to get the full accurate information? Title has already been pulled in most cases anyway.
Sellers, you still have signed a contract:
It is helpful to know what you actually owe on your property before you sign a purchase and sale agreement to sell it. In order to stay within contract, a seller will have to come up with the short fall dollar amount to bring to the closing table.The NWMLS Form 21 Residential Purchase & Sale Agreement clearly states: “ Monetary encumbrances or liens not assumed by Buyer, shall be paid or discharged by Seller on or before Closing.