Since I started selling real estate, I have noticed that the powers that be are dumbing down the real estate industry. When I began selling real estate, the Real Estate Purchase Agreement (RPA) had a provision that when a certain box was checked the seller agreed to warranty against major defects such as:
*Roof shall be free of defects known to seller or discovered during escrow.
*Built-in appliances, plumbing, heating, electrical, air conditioning, heating, water, sewer/septic and pool/spa systems shall be operative.
*Plumbing systems, shower pans, and shower enclosures shall be free of leaks known to seller or discovered during escrow.
*All fire, safety and structural defects in chimneys and fireplaces known to seller or discovered during escrow shall be repaired by seller.
*All broken or cracked glass, and torn existing window and door screens shall be replaced.
When representing a home seller, it was their real estate agents job to counter that provision when applicable. Sadly some real estate agents were so focused on price, they didn’t pay attention to the terms in the contract. And there were problems… big problems. Often, their home sellers didn’t realize they were in essence writing a blank check for buyer repairs. Likely there were lawsuits and the California Association of Realtors changed the contracts. The RPA no longer offered the option for the sellers to warranty the condition of their home.
Another issue was with contingency removal. Approximately ten years ago, contingencies were removed passively. An example: Buyer opens escrow and has ten days for their investigative contingency. Unless the buyer requests an extension, the contingency is automatically (passively) removed on day eleven. The buyer no longer has the option to cancel escrow due to the property condition and have his earnest money returned; the contingency period has passed.
Apparently some real estate agents couldn’t count and contingency periods were overlooked. Again there were problems and likely numerous lawsuits. Once again instead of educating Realtors – or holding them to a higher standard, the RPA was revised. Currently all contingencies must be removed in writing by the buyer.
And believe me this is not a simple process. Often, I have to hunt down the buyer’s real estate agent, and each simple contingency removal can easily take several days after the expiration of the contingency. From a home seller’s perspective, contingency removal is a key issue. The buyer’s deposit is not at risk until all buyer contingencies are removed. Often the seller wants/needs to make moving arrangements and it’s difficult without the assurance of contingency removal.
Recently the National Association of Realtors (NAR) commissioned a report outlining the biggest threat to Realtors. The number one threat found was that masses of marginal real estate agents will likely destroy our reputation. The real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents. This knowledge gap threatens the credibility of our industry. Read the report here
So let’s see if our real estate contracts continue to be revised, or let’s see if NAR and CAR stop dumbing down the real estate contract and instead smarten up their Realtors.