July 26, 2017 – July, 2017 saw more changes to the purchase and sales contract for the State of North Carolina. Anthony Powell, Vice President of Operations, AAFMAA Mortgage Services (AMS) still maintains that Military families need to be diligently informed regarding due diligence and earnest money checks that must be written prior to closing (see AAFMAA Mortgage Services website blog). These costs are real, and all military families should consult with a state licensed loan officer to review prior to making an offer. Don’t sign anything until the military home buyer understands all contracts.
There are approximately 20 new changes in the North Carolina purchase and sales contract. The most interesting is the display and formatting of the contract – which now includes boxes. The authors of the contract believe buyers and sellers should focus attention (boxes are highlighted throughout the contract) in boxed areas.
Here, AMS reviews what the top five changes are for military home buyers. The first significant reinforcement is, “in the event of a dispute between Seller and Buyer over the disposition of Earnest Money Deposit” – the Realtor must obtain a written release from both parties, or until a disbursement is ordered by a court. If the military family is light on down-payment cash, a problem with the inspections or appraisal can cause the earnest money to go side-ways and sit in an escrow account until resolved. This may put the military family on the sidelines for buying a new home, and certainly needs to be considered prior to making an offer to purchase a home (see page two of the new contract).
The second change that military families should consider is to use an attorney. AMS recommends the use of an attorney when purchasing a home. Page three of the contract has a warning to use a state-licensed Realtor, and a state-licensed attorney to close on residential real estate (AMS provides state-licensed loan officers). When consummating a real estate transaction it is important to have impartial third party opinions, which state-licensed loan officers, Realtors and attorneys may provide.
The third area of significance is that the contingency for obtaining a mortgage loan has been watered down (page four and page five). If the military family can’t obtain a mortgage, there is a high likelihood that all earnest money and due diligence monies may be lost. Speak with a state-licensed loan officer to learn the facts before signing a purchase and sales contract.
The fourth area is that the military family acknowledges that the property is being sold in its current condition. This is important. Military families need to know that negotiating repairs must be done and completed within the time-frame of the earnest money check going “hard” (hard means put at risk, and is usually 21 days after the offer to purchase is made). If the seller fails to complete repairs within the time period specified within the contract (the closing date), the entire transaction may be put in jeopardy. North Carolina purchase and sales contracts often afford a 14 day period after the closing date to resolve issues. Most home buyers and sellers may not be aware of this extra two week resolution period.
The fifth change to the purchase and sales contract (page 10 of 13) is that Realtors (Real Estate Brokers) are not allowed to make changes (addendums) to the contract. This is significant. Although this practice may have been in place, page 10 specifically forces the military family to engage an attorney if an addendum is made to the contract.
Purchase and sales contracts are important to understand. Military families should consider hiring state-licensed professionals to obtain the highest level of fiduciary statndards possible. AMS has written extensively on the risks to the military home buyer on the AMS blog.
Competitive, accurate, honest, transparent, and member-owned. Experience the difference at AAFMAA Mortgage Services. AAFMAA Mortgage Services LLC is licensed in 13 states – for a complete list and complete disclosures please visit http://www.aafmaa.com/mortgage (NMLS: 1423968). The team operates from 639 Executive Place, Suite 203, Fayetteville, North Carolina 28305. Call 844-422-3622 (844-4-AAFMAA), email mortgage(at)aafmaa.com. Equal Housing Opportunity. NMLS: 1423968. Anthony Powell, NMLS ID 78385.