Redline Novation Agreement with airSlate SignNow

Redline novation agreement

hi welcome back so early we discussed how to get into a contract we discussed of validity of a contract to make sure that it is implied so today I want to discuss discharge of contract trying to get out of a contract I'm also going to talk about what is innovation I'm going to talk about what is the EMD earnest money deposit I want to talk about time is of the essence I also want to discuss factors of limitation so let's begin [Music] so discharge of contract so there are a few ways that you can get out of a contract so of course the first the obvious right wait to get out of contract is both parties agree so let's say the buyer places an offer on a particular property it goes through inspection after going through inspections they realize that you know it is going to cost one repairs that they had anticipated and then kind of negotiate to have a seller to cover some of those repairs but for whatever reason is so send down so now they would even back out of the contract and again each buyer is given a certain length of time that their deposit is being protected so the buyer backs out and the seller has to release each and every penny of the deposit back to the buyer because again there are a lot of certain at the top let's say twenty days and within those twenty days they're able to carry out all their inspections before they choose to remove the contingency inspection contingency so that's one way agreement apart second way is full performance so you have a scenario where the buyer is happy they receive the keys the seller is happy they receive the funds wired into their bank account that's full performance the sellers name drops off as the Grand Tour and the buyer goes from being a grantee on the title and deed and placed again as now the grantor that we see the keys they were on entitled full performance another way is impossibility of performance or earlier we talked about a contract that is void and we said that a void contract of two ways either an act of God or operation of law so that's another way that you can get and discharge the contract and then a fourth way would be of course again operational while you're breaking the law it's not for legal purpose so you can't get out of a contract so now let's talk about innovation innovation is very important especially for you future real estate stars make sure that you aim to educate your buyer because especially right now a lot of times buyers may feel that they can you know since they're paying cash at a really noble when I first started my career I still always want to work with cash and buyers I mean that's to say that I still don't like to work with kind of spires but if they are not realistic right as far as they'll offer then you're not gonna close the deal anyway so here's a scenario where you have a buyer and let's say the property they're interested in purchasing is for two million dollars and because your client is paying on cash they wanted to submit 1.50 $500,000 difference and the seller says okay you know it it's a lowball offer but I will still respond now remember so does not have to counter that they're not obligated to respond back the seller could just stay quiet and not even respond back so do you offer but let's just say for this example that the seller chooses to respond back they respond back and 1.9 right so they went down a bunch of dollars your client is looking great they're serious I mean if they walk so your client goes from 1.5 to 1.6 so basically the buyer is only going up as they see the subprime action the seller as far as their reduction so we're still often right because the seller offered 1.9 your client offered 1.6 so there's still a $300,000 difference so anyway your client offers to 1.6 and they don't hear nothing that because remember I said that that seller is not obligated to respond to counter back so they don't get anything and then the buyer's agent calls up the seller and say hey did you get my offer for 1.6 and the sellers agent says yeah we got your offer for 1.6 and right although I come by to get a counter back why didn't the seller countered me back and then the sellers they just say well the seller knew what a counter by and the buyer's agent says well you know what fine is really really interested in a property so if they can counter us back that would be great in a sells engines like no we're not going to count me back the last offer is that 1.9 we did receive your 1.6 the Destiny's so the buyer really really wants the property but they were trying to play ball and how to see how low they can get the property right you can't blame them so the buyer says okay let's just give them the 1.9 the buyer agent calls the sellers agent the selling agent says oh well we issued the 1.9 you counter back at food at the 1.6 so that is what is called Novation you substituting the original offer for another offering so in other words anytime the seller is responding back with the offer and the wire even if it's a dollar difference anything other than saying yes we agree to your offer that is Novation or aka our counter offer which means that you've eliminated the original offer so that 1.9 is not on a table the war line because your client chose to submit 1.6 so now if the someone wants to move on with someone else or maybe not deal with you no more it's their prerogative unfortunately so now you have a situation where the buyer really wants to property but then for whatever reason can't get the property because in fact they didn't accept the 1.9 and the seller wants to move on to another buyer so you have to educate your clients when they want to do a law or offer you have to let them know that the seller is not obligated to respond and a lot of times agents get frustrated when us as the sell attention don't respond back to say yet that we've received your offer I've gotten a lot of phone calls from angry agents on especially bank owned foreclosure where you're receiving multiple offers for the most part we're just focusing on the top Terrill offers and I'll be the first one to admit that no we don't respond back to all the offers partially because we feel like the offers really weren't that serious to begin with and again I apologize to all those agents out there that cement offers they don't hear anything back I know it's frustrating I had a scenario where at a Bank of America property and I told the agent I said no this is Bank of America's final offer I told the buyer's agent I said hey please don't do not submit anything that's a dollar below what Bank of America's asking they're telling me to tell you that this is their final offer what does the buyer agent do she submit to offer for $5,000 - $5,000 less right I guess she shot him and pressed on client or maybe the clients who were not listening and what the big owner could do just what they said did we do they pulled the property meaning they took it off the market right just to make sure that that client could not purchase it and that buyer's agent called me upset and I told us a lot you know my name is not Bank of America and this this agent did not understand ovation or did not know how to explain it to their client again this is for foreclosure I don't have the final say just like if I represent the seller the seller has the firefighters say remember we as agents witch's advisors that at the end of the day is your buyer that's that's going to decide how much they feel comfortable submit off before it's your seller that is going to make the decision as to how much they feel comfortable put their property on the market for and the offers that are coming in how much they feel comfortable accepting all we are are advisers that's all we can do so this agent you know was upset even a client slip car client start to calm people right and they were really really upset I think I've heard the wife of the packbow pride right and again Novation so you have to educate your buyers and then another thing too that you have to consider right you're not the only buyer so you probably want to invite you'll find that yes you're paying cash but a lot of times I have to let my cash clients know that you're not the only one that has cash right so you submit an offer it all depends on how bad you want it all right and I know that some investors have certain thresholds as far as they can go and if they lose it's no big deal because it doesn't meet their numbers and that's fine but we as real estate professionals have to educate our clients population or aka counter longer so anytime you don't say yes you submit uncountable so now there's something about statute of limitations so you've heard me make reference to this throughout the previous videos for the state of New York the statute of limitation is six years so in written format again not oral contracts or verbal contracts cause the written contract you have the buyer has six years six years to sue you've already deposit that check you've already spent that Commission check five years later Humana remember to climb I especially do busy work with multiple clients right so you want to make a point to make sure that you're keeping great knows great documentation don't depend on your broker to keep all the documents but what if you leave that broker to go to another company so we only have to make sure that we are holding on to documents for the state of the state but not for you as the agent all we have to just release your license once we release your license that's it so make sure that you're making copies just scan it to your email and then most email providers give you a free amount of storage so I have documents from 2007 so if I haven't final call me and say hey do you remember me probably don't oh do you remember the property you sold me of course I don't right but I'm not gonna tell them now let's say yes yes I remember you and I remember all I need is you know what type of property looking for and of course they probably have mentioned the address trying to remember you so in this property on on Park Avenue East 35th Park Avenue you know you know so now I can go to my email I can look up the address once I look at the edges cuz that's how to label all of my transactions in my email and now I have the clients day they were married the property I sold over type of property and so forth so you want to start getting in a half keep your own records and EMD so in the earnest money deposit we typically call this a good-faith deposit but I don't want to confuse you for the exam so earnest money deposit is going to be not consider it to be the map it's going to be reduced from the overall right so let's say de you're purchasing a condo or co-op you're putting 20% down when you submit your offer you're gonna submit a good-faith they pull their earnest money deposit to show how serious you are about purchasing and a lot of times a lot of interests don't know but it's not necessarily that a buyer who won the big submit is the highest offer a lot of time it's the buyer that's submitted the highest deposit because that money is coming directly out of their bank account so I always tell my client everybody else was probably going to submit you know ten twelve you know fifteen percent you know once you do something higher right which is going to show that you that much more serious because at the end of the day if I am advising my seller i'ma tell my seller yes this individual gave you a much higher offer a full price offer but this will give you a huge deposit that they're willing to let go so our job is to make sure that deal closes so we want to make sure that we focus on the client that we believe is not gonna back out by not going to be make on the transaction now we've gotta start all over again we will put the property back on the market nobody's going to believe that something's not wrong with the property so we want to try to avoid all of that I made to shore then we advised Honorable seller to choose the right buyer the last thing I talked about the time is of the essence now this has to deal with the closing date right because again thank you for being interested in the property but the seller wants to move on right I want to just focus on packing their boxes and then knowing that okay this transaction is gonna post 30 days you know 40 days 45 days and then they're gonna receive this water so time is of the essence and typically most contracts across the country not just in New York you're gonna have a per diem right so each day that you're late it could cost your client 200 bucks so Jenna fifty bucks 350 bucks per day that they're labeled right so this is where if they're not paying all cash and you have a mortgage that's going to pay for the property this is where that mortgage representative and them doing their job comes in right where you need to make sure you as the buyer in imaging is managing them right make sure that your honor what documentation is you need how long do you think it's going to take just get the appraisal but you have to be warned them because you want to make sure that you're not costing applying to make $1.00 per day or Deana right again all that it's gonna mean a contract that's your sigh all right so again if you guys have any questions anything you felt like I left out or anything that you need more clarification on please leave in the comments don't forget to life [Music] again for coming to our channel we look forward to continuing to help you and guide you through your real estate what we are currently doing in New York real estate sales book but later on we will follow with California sales both Florida sales book as well as New Jersey sales book so look forward to those videos one of the other things that we want to also discuss in the shadows investment as most real estate professionals out there they never get to learn about investment at their firms so we want to talk about foreclosures what type of properties you should buy so don't forget to Like and subscribe and share the video so that you notify when we drop those videos we're trying to drop at least a minimum of three videos per week and we look forward to seeing you in our next video thank you [Applause] [Music]