Before becoming a real estate agent, I was in mortgage banking. Years ago, real estate lending was based on common sense. We reviewed each loan application manually; there was no computer program to determine if an applicant was credit-worthy. But real estate lending has changed over the years.
I believe my lending background makes me a better Realtor. Years ago, withhold accounts were common. In some instances, if repairs were to be made, they could be made after escrow closed. The lender would withhold from either the buyer or seller’s proceeds 1.5 to 3 times the amount of the repair. Repairs were completed, the lender was provided proof, and the withheld proceeds were disbursed from escrow.
But withholds have gone the way of the dinosaur. Lenders don’t want to “think” anymore; it’s too much work. And because of this aspect, real estate agents need to be creative.
Withholds could also be used for termite fumigation. Termite reports and completion are typical of Los Angeles real estate purchase agreements. In LA County, the seller customarily provides the buyer with section I termite completion. When a termite report calls for tenting (fumigation), the lender requires the termite completion before closing.
This makes sense until you analyze the inconvenience to the seller. Who wants their furniture, clothing, and food inside the home when it is fumigated? And the gas needs to be turned off and on. So what is the home seller to do?
The savvy listing agent omits the termite report from the purchase contract and makes a separate disclosure to the home buyer. When disclosures and reports aren’t mentioned in the purchase contract, the lender does not require them in their analysis. Escrow can close, the seller moves, and the tent is placed on the home. The tent is removed, and the buyer can move in.
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