Beware of a Real Estate Addendum!
Beware of a real estate Addendum!
Making an offer on a home or land? One thing that most buyers and sellers do not know is the importance of dating documents and which document supersedes the other. Most real estate agents in Columbia use one of several contracts. This is a good practice because most agents are familiar with the contents of the contract such as inspection periods, closing date extensions, etc.
Many times agents will not edit a contract after it has been ratified but will create an addendum to the contract. An addendum is when a buyer, seller, or principal is changing the terms of the contract. One of the most common is a repair addendum. Once an inspection is completed a buyer will ask for repairs to be made by use of an addendum. Often referred to as a “Repair Addendum”. A repair addendum is usually pretty safe and common.
One of the most concerning issues that I come in contact with is when a bank-owned property, corporate owned property, a foreclosure, or a new construction home is being purchased. Almost every time an addendum is presented overriding the conditions of the original offer to purchase contract. BEWARE OF THESE! Here are a few examples of red flags that I have found with these Addenda’s.
- $50-$150 “Per Diem Charge” for every day after your closing date- This is a fancy way of saying that they want $50-$150 (sometimes more) for every day after the scheduled closing date. My question is will they offer you the same amount if they fail to close as scheduled?
- Sellers right to void the contract- This give the seller no obligation to the contract which basically puts you at risk, and not them. It’s a novel idea for the seller to be able to back out of a deal for no reason at all, while the buyer has made a commitment for the purchase and would be punished if he/she didn’t follow through.
- Seller not to be responsible for any back taxes, assessments, HOA fees, etc. – This is absurd. Always ask that all expenses to be prorated at the time of the closing. Otherwise, you may end up with the previous owners hefty tax bill, HOA Fees for several years, and/or a special assessment. In a Blythewood SC Neighborhood I’ve seen HOA Fees and property taxes add up to over $10,000.
These are just a few examples. If you are buying real estate in South Carolina make sure that you are aware of these circumstances. If you are “using an agent” make sure that “your agent” is representing you. All SC licensees are required to provide you an Agency Disclosure Brochure and you should have signed a Buyer Agency Agreement to initialize representation.