What are Contingency Provisions? Do I need them?

Contingency provisions
describe an event, activity or condition which needs to occur before the purchase agreement transaction can proceed toward closing. On the occurrence of the event or approval of information described in a contingency provision, the contingency has been satisfied and is no longer an obstacle to further performance and closing.

Contingency provisions authorize the buyer or seller to cancel the transaction when:

  • the described event fails to occur; or
  • the information received is disapproved.

Contingency provisions stating conditions allowing for the termination of an agreement are separated into two categories:

  • event-occurrence contingency provisions — those provisions satisfied by the existence, completion or outcome of an activity or event which eliminates the contingency; and
  • further-approval or personal-satisfaction contingency provisions — those provisions satisfied by the receipt, review and approval of data, documents and reports which eliminate the contingency.

Event-occurrence contingency provisions address the occurrence of specific activities and events, such as:

  • the sale or acquisition of other property by the buyer or the seller;
  • obtaining purchase-assist financing;
  • the approval of building permits; and
  • the elimination of title conditions, or the release of encumbrances, such as liens or leases.

Further-approval contingency provisions address the right of the buyer or seller to cancel the transaction on their disapproval due to unacceptable property conditions and
material facts, such as:

  • disclosures and inspection reports concerning the physical integrity and natural and environmental hazards of the property;
  • appraisals;
  • title reports; and
  • rental income and expenses.

To terminate a purchase agreement under a contingency provision, the buyer or seller needs to have a reasonable cause to cancel for the cancellation to be enforceable. When a reasonable basis exists, they may avoid enforcement of the purchase agreement by the other person by notice of cancellation.

Contingency provisions contained in purchase agreements are eliminated by either:

  • satisfaction of the contingency provision by the occurrence of an event or by someone’s approval of the conditions contained in information, data, documents or a report; or
  • waiver or expiration of the contingency provision.

Contingency provisions are unique as they deal with uncertainties at the time an agreement is entered into. As a matter of good practice, contingency provisions are included in purchase agreements to eliminate any uncertainty about aspects the property’s title, income/expenses or physical condition. Before escrow is able to close, contingency provisions need to be eliminated.

How to Stage a House for Free: 7 Ideas That Don’t Cost a Dime

One of the most common mistakes sellers make is assuming they need to sink a bunch of money into home staging. Some choose the expensive route—swapping out their furniture and art at the behest of a hired professional home stager—but that’s not the only way to impress potential buyers.

“Everyone needs to stage their home to sell it efficiently,” says Laura McHolm, co-founder of NorthStar Moving. “But you do not need to spend a lot of money to stage your home.”

Want to get your house in tiptop shape without spending a dime? Follow these home staging ideas that are 100% free.

1. Depersonalize

The first step to staging your home is getting rid of personal items such as photos, albums, handmade items, trophies, and mementos—even the kids’ artwork on the fridge.

“No family pictures,” says McHolm. “A buyer wants to be able to envision living in that house. It’s not your house anymore. It’s a house that will soon be their house. So get the ‘you’ out of your house.”

Removing your personal items isn’t easy—they’re the things that make your house feel like your home, but keep in mind that it’s only temporary. Pack them up and store them safely until you can find them all spots of honor in your new place.

2. Declutter

All that stuff littering the surfaces of your home has to go.

“Most surfaces should have between three to five items on them, because clutter is distracting both in photos and in person,” says property stylist Julie Chrissis, of Chrissis & Company Interiors. “You want buyers looking at the home, not the stuff.”

This means eliminating piles of mail and magazines, collections you have on display, knickknacks, and most other items that can easily be packed away.

3. Nix the extra storage

If you’ve been living in your current home for a while, you’ve probably come up with a lot of creative ways to store all of the items you’ve accumulated. But now that you’re hoping to sell, it’s time to get rid of them. Purge!

“Eliminate any plastic storage bins, over-door storage, above-cabinet storage, and extra racks in rooms,” says Chrissis. “This is important because buyers never want to think they will outgrow a home. A seller’s job is to show them there is plenty of storage space for them to grow into.”

Since all those stored items are already packed into bins and baskets, it should be simple enough to move them to a storage facility until you’ve moved.

4. Deep clean

Even if you consider yourself a neatnik, you’re probably going to need to do a little extra work to get your house ready for buyers.

“Take a critical eye to your home. Living somewhere daily reduces the things you notice that might be a problem, like dirty walls, scuffs and scrapes, leaks, or even odors you have become accustomed to,” says Marty Basher, home organization expert at ModularClosets.com. “Also, deep clean the kitchen and bathrooms. These areas of the home are generally the most cluttered and dirty. Both of those things will turn off willing buyers.”

It might help to ask a friend or family member to come by and help you find areas that need attention. Someone who doesn’t live in your house will be better able to look at your space through the eyes of a buyer.

5. Change the furniture layout

Maybe you’ve placed your couch at an odd angle to keep the sun out of your eyes during your midday nap, or your armchair is in the middle of the room so you can better see the TV. Those things are all fine for you—but not for buyers. Now it’s time to stage the room for optimal space and flow.

“Room layouts should be set up for photos first. It’s important that the photo not be of the back of a sofa, large chair, or other piece of furniture, as this makes the room look smaller because it blocks the view of part of the room,” says Chrissis. “The same goes for open houses and showings. If buyers see a room with furniture barriers, it makes the room seem smaller.”

6. Let there be light

Now that your home is clean and uncluttered, it’s time to brighten things up so buyers can actually see it.

“You want natural light and lamps with warm light—no swirly bulbs that look like office light,” says Chrissis. “We tell most of our clients to remove valances as they typically make a room darker and, in most markets, are a little out of fashion. Lamps are important, especially in winter months when there is less sun and sunset is earlier.”

7. Reduce your furniture

If your house is filled to the brim with furniture, it’s time to move some of it out.

“After the home is thoroughly cleaned out, keep only up-to-date furniture in excellent condition, and just a couple of accent pieces in each room,” suggests broker and interior designer Tory Keith of Natick, MA.

Not only does this go hand in hand with making things look less cluttered, but less furniture will also make the rooms look bigger.

Move unneeded pieces to the basement, garage, or a storage facility until you’re ready to move.

How do I Use a Pest Control Report?

Structural Pest Control (SPC) report is not a legislatively mandated seller disclosure in a California real estate transaction, unlike a Transfer Disclosure Statement (TDS) or a Natural Hazard Disclosure (NHD). Most conventional lenders do not require a NSPC report or termite clearance.

However, the existence of pests such as termites adversely affects the value of property. Since this fact relates to value, the seller is compelled to disclose their presence before the buyer makes a decision setting the price and closing conditions in an offer submitted to the seller. 

To best disclose a pest infestation, the seller orders an SPC report. The report is included as part of the marketing package for delivery to prospective buyers or their agents when they inquire about the property — before the seller enters into a purchase agreement with the buyer. 

A Pest Control Certification — a certificate of clearance — is issued by the SPC company to indicate the property is free of infestation or infection in the visible and accessible areas. This certification is commonly called a termite clearance. If any infestation or infection is not corrected, it will be noted in the certification. The SPC report separates the findings and recommendations into two categories: 

1. Section I items, listing items with visible evidence of active infestations, infections or conditions that have resulted in or from infestation or infection; and 

2. Section II items, listing conditions deemed likely to lead to infestation or infection but where no visible evidence of infestation or infection was found. 

If a seller has obtained an SPC report which discloses the existence of conditions that have an adverse effect on value and does not inform the buyer of the contents of the report, the seller is defrauding the buyer. Therefore, the buyer may pursue the seller and the seller’s broker/agent to recover the cost of repairs, either prior to or after the close of escrow. Provisions in the purchase agreement allowing the seller to entirely avoid the cost of termite clearance and repairs are not enforceable when known defects go undisclosed at the time the buyer and seller enter into a purchase agreement.  

Further, when the seller does not provide an SPC report, the buyer needs to consider ordering their own SPC report.

9 Tips for Home Sellers: What You Should Know to Land a Buyer’s Offer

“What do I do when I get an Offer?”
– That is a common question from sellers.

If the offer is at or above asking price the answer may be easy. But remember money is not the only consideration. You may prefer a lower offer with better financing or a stronger buyer or a more convenient settlement date. When all factors are favorable, and the price is right—set the contract and reel your buyer in quickly. 

Typically with my assistance, you will negotiate. It is an art (somewhat like fishing), where you may give and take over price, terms special conditions, or closing costs. Even carry back financing, dates of possession, or included personal property may come into play. 

Here are some tips to help you throughout the process: 

Aim for a Sale

Remember, while your aim is to get as much as you can for your home, the buyer’s aim is to find your lowest acceptable price. In the end, however, you’re both angling for the same catch: a sale on the best possible terms for both of you. 

Evaluate the Buyer

Find out as much as you can about whether the buyer can afford to purchase your house. You’ll gain peace of mind knowing your buyer is qualified to pay the price you agree upon. Buyers who are ‘prequalified’ have been told by a lender how large a mortgage they are likely to qualify for, while buyers who are ‘preapproved’ have a tentative loan commitment from a lender. 

Stay Cool

Keep communications on an agreeable level. At all stages of negotiation, be as flexible as possible. Don’t lose your cool—even if the buyer gets tense—or you might lose your sale.

Ask Questions

When offers come in they may contain complicated terminology, sometimes even 2 or 3 addenda. They should be carefully considered in person either at my real estate office or in the quiet of your own home. I will help you to understand all of the ramifications.

Consider all Offers

Remember, you have 3 basic choices: you can accept the offer, reject it, or counter offer with an alternative that suits you. Give consideration to every offer, even if it’s lower then your asking price. Outright rejection is seldom wise unless it is so ridiculous you know the buyer is simply fishing. With my counsel, you might make a counter offer close to your asking price. That seems fair for your buyers and lets then know, while you are not inflexible, neither are you so anxious to sell you’ll take anything. 

Respond Quickly

When buyers make an offer, they are in the mood to buy. But moods change. Be sure to respond as soon as possible, even with a counter offer. Buyers are known to get ‘buyers remorse’ in the middle of the night. Don’t delay responding if you really want that sale now. Keep mum, of course, about the minimum price you’d accept, but keep the dialogue going. It is not unusual to exchange 2 or 3 counter offers. Remember, I am professionally trained to find a meeting of the minds where everyone wins.

Rely on your Agent

Rely on me to keep negotiations moving forward. Realize agents are required by law to bring you any offer – no matter how low. Knowing what you want from the sale, I am in a unique position to help negotiations along. By relaying your counter offers, I can depersonalize the delicate money discussions and keep negotiations flowing toward eventual agreement. And remember it is to our financial benefit to see you get the highest price the buyer is able to pay. 

Be Patient

Exercise confidence and patience as the buyer weights the counter offers. Be forthcoming with all information requested and call attention to all the areas of agreement. Be positive. When disagreements occur, iron out all the small negotiating areas before getting down to any real stumbling block later when most items are agreed.

Consider Sweeteners

As the bidding gets close to your acceptable price, you might offer some extras – ‘sweeteners’ – to make a higher price acceptable to the buyer: the inclusion in the sale of draperies, lawn furniture, bbq grill – whatever you don’t mind giving up. If you are in a position to offer financial support, now is the time to offer to negotiate points or hold a second mortgage to help sell your home.

Take Care with Contingencies

In drawing up your contract, consider requests for contingencies carefully. Contingencies – stipulations such as obtaining financing or home inspections – are typically used to smooth acceptance of a contract without delaying the buying decision. Each contingency must be satisfied before the sale is final and should include a time limit for work to be completed.               

When you’ve landed your buyer, your signed acceptance of a written offer becomes your sales contract. Except for removing any contingencies, this document is the binding basis for the sale.

Ready to sell your home? Call Steve today to get the process started: 760.476.9560

6 Home Renovations to Avoid Before a Sale

If you’re planning to sell your home, simple renovations can add value and attract homebuyers. However, some home improvements may actually lower your home’s value or simply not provide the return you’re looking for.

Here are the top renovations to avoid before selling your home:

1. Extravagant light fixtures and accents. The cost of ornate features often exceeds the value they add to your home. Keep it basic.

2. Eccentric tile and excessive carpeting. Homebuyers favor clean, simple flooring. Quirky tile and too much carpet mean more makeover work for your buyer.

3. Bold wall designs. Bright paint colors, elaborate textures and even wallpaper can repel buyers. Stick to more neutral designs.

4. Luxury kitchen and bathrooms. Modernizing your kitchen and bathroom spaces provides a high return on your home — but avoid overly expensive, high-end upgrades that cost more than the added value.

5. Removing closets and combining bedrooms for extra space. These renovations hurt the marketability of your home, as buyers typically seek more bedrooms and storage.

6. High-maintenance landscaping. Intricate landscaping results in more maintenance for your buyer. Opt for simpler garden and yard designs to improve your curb appeal.

If you’re ready to sell, let me help you get the most return from your renovations. Call me for an appointment!

What happens when the buyer or seller breaches the purchase contract?

Remedies available to buyer when the seller a materially breaches a purchase agreement contract include:

  • abandoning the transaction by entering into a mutual cancellation of the purchase agreement and escrow instructions
  • acquiring the property by pursuing specific performance of the purchase agreement
  • pursuing the recovery of money, whether or not the buyer still wishes to acquire the property

For example, when the seller resells the property to another buyer at a higher price after accepting an offer from the original buyer, the original buyer may pursue specific performance and demand the seller adhere to the purchase agreement.

However, if the original buyer decides not to pursue specific performance, the seller is liable to the original buyer for the difference in price. A buyer’s money claims include:

  • general damages, money directly expended or the monetary value lost in the transaction
  • special damages, money collaterally lost due to the seller’s breach
  • prejudgment interest at the rate of 10% on all monies recovered.

A buyer is allowed to recover expenditures incurred prior to a seller’s breach to prepare a property so they can take possession, such as construction costs advanced by a buyer for upgrades and alterations. However, the purchase agreement by its provisions needs to reflect the intention of the buyer to incur these expenditures.

Conversely, a seller of real estate faced with a materially breaching buyer needs to promptly decide whether to:

  • enforce the purchase agreement;
  • remarket the property for sale; or
  • retain the property and postpone or entirely forego any resale effort.

A seller’s total recoverable losses when promptly remarketing and reselling the property include:

  • carrying costs of mortgage interest payments, taxes, insurance, maintenance and utilities incurred by the seller and interest on the seller’s net equity between the date of the breach and the date escrow closed on the resale less the property’s rental value when the seller remains in possession; and
  • any reduction in the seller’s net proceeds on the resale below the net proceeds the seller was to receive from the breaching buyer’s transaction due to:
    • the increased closing costs the seller additionally paid, such as the new buyer’s nonrecurring closing costs, financing fees on the resale and mortgage prepayment penalties; and
    • any decline in the property’s resale price.

When the seller takes the property off the market or is not diligent in their resale efforts, their recovery of money is limited to their out-of-pocket transactional expenses, property operating expenses incurred before the buyer’s breach, and any move out and move back relocation expenses to fulfill their performance under the purchase agreement.

When the seller remains in occupancy through the date of the breach, these costs are offset by the rental value of the property.

Costs to Sell Your Home

To make an informed decision about the arrangements and conditions for selling your property, you need to know the costs you will incur on a sale. Selling costs consume some of the price you will receive and thus reduce the amount of net sales proceeds on closing.

Selling costs you will likely incur in the preparation and sale of your property include:

  • Home inspection report (HIR): The fee a home inspection company charges to conduct an inspection of the property and provide an HIR you use to properly prepare your transfer disclosure statement (TDS) your agent hands to prospective buyers.
  • Structural pest control report and clearance: The fee a pest control operator charges to inspect and submit a report on their findings and the costs of repairs necessary to eliminate any infestation and repair any existing damage or condition allowing for infestation.
  • Compliance with local ordinances: The costs associated with retrofitting, curative permits and any repairs necessary to meet local ordinance standards as a requisite to a change in ownership.
  • Natural Hazard Disclosure (NHD) report: The fee charged by a third party for a review of the county records and the preparation and submission of an NHD report on the natural hazards affecting the property due to its location.
  • Smoke detector/water heater safety compliance: The costs incurred to install smoke detectors and water heater bracing to comply with local ordinances.
  • Home warranty insurance: The premium charged by a home warranty insurance company to issue a policy to the buyer.
  • Escrow fee: The amount charged for escrow services to process the closing of the sale.
  • Recording fees/documentary transfer tax: The combined recording fees and transfer taxes collected by the county recorder to convey title.
  • Title insurance premium: The premium the title insurance company charges to issue a policy of title insurance on your conveyance of the property.
  • Reconveyance fees: The reconveyance fees and recording fees charged when your mortgage is paid off to release the mortgage liens from the record title to the property sold.
  • Broker fees: The fees earned by the transaction brokers and paid on the close of escrow for the sale of your property.

Your agent estimates the expenses you are likely to incur on a sale of your property by preparing a seller’s net sales proceeds sheet and reviewing it with you when listing your property for sale and reviewing the merits of each offer received to buy your property.

What Happens If I Withdraw My Listed Property From Sale?

Occasionally, a situation arises which causes the owner of a property listed for sale to 
withdraw their property from the market. This owner has the option to voluntarily withdraw their listed property before it sells or the listing expires. 

Reasons an owner may have for withdrawing a listed property from sale include:

  • a change of job;
  • a family crisis;
  • the inability of the market to deliver the desired selling price; and
  • other personal reasons.

An owner who withdraws their home from the market is not breaching the listing agreement. However, they do interfere with the broker’s expectations of locating a buyer and earning a fee.

Therefore, the owner needs the broker’s consent when withdrawing the property from sale. If not, withdrawal triggers the broker’s right to collect a full fee as agreed. 

When the owner and the broker mutually agree to a withdrawal of the property from the market, no fee is due the broker, unless:

  • the owner and broker agree to the payment of a sum of money for the marketing effort undertaken and the opportunity the broker lost to earn a full fee by locating a buyer; or
  • the property is sold within the listing or safety period — with or without the broker’s involvement — in which case the full fee is due to the broker.

Conversely, the broker is entitled to a full listing fee when the owner’s conduct, without the broker’s consent, causes the listed property to be:

  • withdrawn from the market;
  • transferred to others;
  • further leased; or
  • otherwise made unmarketable.

Further, the full fee due the broker compensates them for the time, effort and money invested in the marketing of the property before the owner removed it from the market. Also important is the broker’s lost opportunity to locate a buyer and earn a full fee under the listing.

If you have questions about listing agreements, your homes value or the market. . . I am only a phone call or email away.

Escrow: What to Expect at Your Signing

As you near the end of your transaction, and when Escrow has received and prepared the required documents, you will be contacted to set an appointment for you to review, approve and sign your documents. This portion of your transaction is referred to as “the signing” and will usually occur a few days prior to your actual close date.

This instructional video will prepare you for what to bring and what you can expect at your signing.

Closing Disclosure

The Closing Disclosure is also required to be given to you by the CFPB. While your lender is charged with providing this document, it may assign that responsibility to your escrow or title company. You’ll receive your Closing Disclosure at least three business days prior to your transaction closing.

What is Escrow?

Buying a home is an exciting event, but the process of completing that purchase can be complex. When you make an offer on a property and sign a sales agreement with the seller, the next step is to open an escrow account.This account keeps funds and paperwork in the care of a neutral third party – like an escrow or title company – until all the requirements of the sale have been met. Watch this video to learn more about the process, keeping in mind that many aspects of the escrow process vary depending on local customs.


To complete the purchase of your home, you’ll have a major role to play throughout the escrow process. Your escrow officer will be required to follow the closing instructions and meet the requirements outlined in the sales contract you and the seller previously signed. It’s important to direct any questions regarding the escrow process to your escrow officer, and any questions about your loan directly to your lender. Watch this video to learn more about closing your transaction. And congratulations on your new home!

What is Escrow Infographic