Trade Secrets Inspections Podcast
Join host Rick Kooyman of Trade Secrets Inspections and stay in the know. In each episode, Rick shares cutting edge insight on the best ways to protect you most valuable asset... your home.
Trade Secrets Inspections Podcast
TSI Season 2 Podcast # 7 NABOR vs. FAR Bar, Real Estate Contracts in Naples, FL
Sergio DeCesare and Rick Kooyman discuss the nuances of real estate contracts in Naples, Florida, specifically the board contract, the neighbor contract, and the state contract called the Fire bar. Rick emphasizes the importance of due diligence, especially for vacant land, and highlights the differences between the two contracts, particularly regarding defective items and mold. He explains that the neighbor contract shifts more liability to buyers, while the Fire bar contract is more balanced. Rick also stresses the importance of thorough inspections, including environmental assessments, and the potential for addendums to modify contract terms. He offers a 100-day warranty program to mitigate risks for homeowners.
Hey, there everyone. Sergio here, Max business profits, small business coaching consulting firm. I'm here once again with my good friend and home inspector extraordinaire, Rick Kooyman. Today we're going to talk about the real estate contracts in Naples, Florida, there's the board contract, the neighbor contract, and there's a state contract called the Fire bar, and Rick is going to discuss with us the nuances of those contracts in respect to home inspections and inspection periods. So with that being said, Rick, let's go ahead and dive in and tell us what you know.
Rick Kooyman:Alright, great to be with you again. Sergio, um, yeah. And I think this is an interesting conversation that often times gets overlooked or bypassed in the buyers purchasing, you know, experience, and it just kind of get gets chosen by the realtors and the brokers at a lot of times. But there are some change. There are not just changes and things always changing, I'm sure, but there's, there's some variations that I see people getting caught up on a few times, and they, you know, I hear about it, you know, it comes back around, and they want to know why things are the way they are. So I thought maybe we'd take a minute and discuss how it comes to be that way, and look at the fundamental basics of, you know, there's basically three different forms of buying stuff, and there's two, like you said, there's two different contracts, the far bar and the neighbor, you know, you can maybe either buying vacant land, you know, so you have a vacant land contract, and there's, you know, the two versions of that, and Within that contract, by itself, that's pretty they're pretty identical, in my opinion, and by no means take this as legal advice. This is just my interpretation of what I see going on and how I read this variations and these little clauses of these contracts. But you know that the due diligence period is most important, and even when it's in vacant land, you know, you want to make sure of the environmental stuffs and the county rules, and you really got to spend a little more time on it than you may think in assessing the usability of of land, especially down here in Florida, because, you know, they're trying to reclamate A lot of what they've done in the past. And you know, at some point it's got to get paid for. So interestingly enough, you've kind of just went through this yourself. You've sold a piece of property. And, you know, there's people think they come down here and they're going to buy a piece of land here and start building on it, oops. But we know, don't we, that there are some nuances to that as well. I mean, absolutely, we had to figure out whether or not there was any kind of standing water or top of topographical streams or creeks running through a property. I mean, you can look, I've gone through this myself, where I've I've flipped some property, I'm not too far from where I live, and looking at the property itself from a top topographical point of view, the state can come in there and say, Well, you know, right down the middle of this lot, right here, there used to be an old Creek, or some sort of marshland, which, you know, if you if you went to the land today, you'd look at and go, Hey, not not here, but weeds, yeah,
Sergio DeCesare:abandoned orange field, yeah, you know, they'll go on there. They're still, you know, they'll do a, what I call the medical survey, yeah, absolutely.
Rick Kooyman:The whole ecology. It's not just the plants, it's the wildlife. And, you know, this point, it's, it's very expensive to develop undeveloped land in, especially in Collier County in particular, yeah, if you have a lot of limitations on just, on just buying vacant land and and, you know, like you said, we did just move through some a lot we had purchased. And, you know, we just finally got rid of it ourselves, and that's great, and we're still in the market for things, but it was very interesting to see some of the complications of how permitting works and the the order of events. Let's put it that way, that have to occur for the county to let things happen. And it's not always exactly as you think it would be. It's very much. We want single family homes built as a whole unit, and we want them built by professional builders and and that's other thing, anything other than that, there's going to be a lot of pushback on Well, the funny part about it is, and you and I have had this discussion, is, you buy something, you think you own it, right?
Sergio DeCesare:Then you go out there and you take down a few bushes, or you cut down a pine tree or something, and you get the letter. You got the letter, right? What do you do? You can't do that, the code
Rick Kooyman:violation letter and find out that you weren't allowed. Allowed to cut down the tree that's been in your yard the whole time you've lived there for 30 years?
Sergio DeCesare:Yeah, we're not talking Yeah, we're not, we're not talking about cypress tree. We're talking about maybe a pine tree, maybe even a pepper hedge. You know, you spot to park your car and all of a sudden wrong
Rick Kooyman:elevation of ground, and you cut it they there is a way for them to make that difficult on you, and depending on where and how and why, it may or may not occur, but yeah, that's a very intriguing
Sergio DeCesare:thing. God forbid you have a turtle or a tortoise walking through that that life. You
Rick Kooyman:have something nesting on there that's protected. You might wait five years to be able to use that land, yeah, because if you can't do anything but leave it alone and wait for it to take its natural course, and if it wants to live there its whole life, it gets to
Sergio DeCesare:you until it's done that China doesn't want to pay anymore. Can't get them off. You can't get them out. Another topic, but you know, just, I want everybody know that you know this, this, some of this is born for personal but, yeah, let's go on and go ahead and, you know, we're not as concerned with vacant land contracts as we are as it comes to the structure, the
Rick Kooyman:properties, yeah, but you know, definitely do your due diligence. If you're looking at vacant land and you want to do development and stuff, and you really want to get into the EPA and the wetlands and the development fees and elevations and wildlife and the whole nine yards of it all, and it's all important, but most of the time when it's an existing property, you've kind of gone past that step, unless you're going to do an addition or build another property, another structure on the property, then you got to kind of go through the same hoops in that but outside of that comment and that conversation, back to just looking at these contract differentials that there's the property purchase contracts to looking at now. So there's basically two ways you can move forward with buying an existing structure, and they're generally referred to as the standard Residential Purchase Agreement, or the as is contract. And again, there's a neighbor version and a Florida Bar version of both those now and as is side of things, there's not a giant bit of you know difference in the things that I see people having headaches with, as as long as you know that you definitely want to make sure of the land stuff, and you have to make sure that you have the right exit,
Sergio DeCesare:right? Well, we're at it. Why don't we just differentiate the neighbor contract versus the far bar contract? So the fire bar contract is basically a Florida Association of Realtors contract with the state of Florida. It's a good contract. I've written that contract many, many times, and I prefer it the neighbor contract is basically a contract drawn up by a bunch of attorneys in, you know, neighbor stands for Naples area board realtors. So you can imagine that was a bunch of Naples, you know, attorneys on the payroll for the board just writing a contract that would best suit them, takes the liability off the realtors and puts it solely, almost solely to me, in my opinion, on the
Rick Kooyman:buyers. Yeah, that's exactly the point there, right? Exactly. And that's what most people are not not catching that very point as it's put on the buyers and, and oftentimes the buyers not aware of that differential that mostly comes in, not in the as is contract, but in the general purchase agreement and, and just like you said, the neighbor contract was written for the advantage of the realtor side of things, and this is a very important point, because it goes to the point of the actual legitimacy of a buyer's agent. And does a person that's getting paid a straight commission represent you most first, or are they representing their own interest and timeliness of getting to that final closing, you know, and the the there's, there's a desire to get paid by everybody, right? And these contracts are written to get to closing as soon and as smoothly as possible, in my opinion. So the neighbor contract was specifically added to, as I see it, to facilitate the closings of deals that would power probably, in my opinion, be walked away from and and except for the form of the contract that the. That purchase agreement got written on, people are finding out that they're not able to get out of a potential buy after the inspection, and they find out a few things about the house, but it's actually written out of one or the other contracts, and the one particular one that I see the most often times, is regarding mold in particular, you know, a neighbor contract.
Sergio DeCesare:It's become quite a subject in the last couple of years due to recent weather events. So I think it, yeah,
Rick Kooyman:and there's some, there's really nuanced differences between the two contracts in regard to what are called defective items and cosmetic items. And this is, this is everything about what we do and write our report. So this is how that is determined. And then who is responsible for what and when, and on the farm, our contract, if you read what is the owner's responsibility is basically to fix more defective items than on the neighbor contract. And the neighbor contract is going to exclude, like I said, Aspergillus, penicillin in particular, as a problem with the house, and that is the most common form of toxic mold we come across. And that reason, in my opinion, it was put in that contract is just that, because it is so prevalent that they won't. They don't want to see the contracts canceled over it time and time again, and they tweak the contract so that the buyer can't get out. If that's the only issue of contention, they're obligated to still purchase that mold contaminated house at their purchaser's expense. And you gotta be aware that that's within these contracts. So when you're writing your So basically, what they're saying
Sergio DeCesare:is, okay, here's your inspection period. You've got until this date, this day, to arrange your inspections, get them in there, get your reports back. Okay? And then let's say someone goes in there, someone like you, goes in there, goes you know what we're tracking, a little bit of malt probably needs a little bit of remediation somewhere in that house, and I don't know, a little bit of remediation,
Rick Kooyman:It can't even be like a whole room, completely black with but if it comes back as Aspergillus at any level or quantity, it doesn't matter, right? Okay, yeah, we see it, but don't worry about it. You need to follow through with the purchase. Yes, without adjustment or negotiation needed. Right? You could fight about it all you want, but you signed the contract, and this is not a reason to change the contract, even though you may not have ever seen the property and you saw listing photos and a walk through, and they never actually showed you the guest bedroom that was, you know, destroyed with mold and has affected the whole rest of the house, but you didn't know that, and nobody was showing you. Didn't have to be that dramatic, but it can be, and that's even worse, right? I mean, it can literally be just, you know, a dirty air handler, and we just want some the air duct clean and the the house sanitized. I mean, this is pretty simple ask down here, and this is why it's very common that they have this issue. Because, you know, air systems more often than not, are contaminated, and more more often than not, I walk into a home to do the inspection, and honestly, I can't wait to get out, because my throats irritated from the allergens in the air. And I, you know, I go in so many of them, we get more sensitive every time we get in exposure to these things. So the the allergens, you know, they present themselves pretty apparently, you know, in your olfactory after a while. So, you know, it's pretty evident to us, but maybe not to you, when you walked in there and you're from out of town, and you're just like, I don't know, it smells like a Florida House. Well, it's still, it sounds like a Florida man comment to me, you know, I mean, there's, there's, there's more to be said about that. Let's, let's look at that a little more. This could actually get expensive for you. And you know that that irritant is going to affect your health, it's it's literally going to affect how you think, how you feel, in your mood, and I
Sergio DeCesare:think it should certainly at least affect the price tag. Yeah,
Rick Kooyman:exactly. But again, that neighbor contract doesn't even give you the right to negotiate on it, and it's just a tragedy, in my opinion. But regardless of that, there are variations in the two different contracts, and I just want people to pay attention to all the verbiage, and not just the blank lines that got filled in on the agreement. And, you know, yeah, we agreed to this number and that number and this date and that date, but literally. Look at what your due diligence contract says. Look at what your your rights as the buyer are for you know who's responsible for defective items, and what are the definitions of those defective items. And when you see the word shall, that means you must, and if it doesn't say shall before it, it's not a legal requirement to be done, and oftentimes it will be a shall not comment. And these are the things that people aren't looking into, or they're they're they're looking past, and then it's coming back in the end, and in our detailed reports, you know, because people want to know all the details, and we give it to them, but then they're like, Well, you gave us all these details, but now we're having problems, and we've got stuck with this, and it's almost like you told us bad news.
Sergio DeCesare:I want to reach a realtor saying that, or,
Rick Kooyman:well, yeah, we'll have that conversation in the next go around about the deal killer and where we stand in this podcast,
Sergio DeCesare:literally. And that's the next podcast, yeah. Why? Why home inspectors are viewed as as deal killers, deal killers?
Rick Kooyman:Yeah, we'll get to that one next. But this one is before we get to having that argument about whether we want to close or cancel and what your rights are and and again, buyer beware and buyer beware and again. I can't tell you how many times I see transplant people, oftentimes widows, who you know are new to generally just owning property themselves to begin with, and now they want to come to Florida and basically live the retired life and and there's the equal amount of the new realtor to the area that are working with the new residents. And there's just not a lot of local knowledge being pushed, you know. And they're like, I've been, you know, doing this for 25 years. It's just a new town, whatever, you know, again, there's differences. It matters who you work with. You know, what
Sergio DeCesare:you're saying is selling, selling real estate in Naples, Florida, is a tad bit different than selling real estate in Indiana.
Rick Kooyman:Absolutely, absolutely. And then buying real estate, you know, the risk, you know, and the overlying differences of our environment, and, you know, the changes that we're going through in the market. And just not just the real estate market, but the insurance market and the ownership market, and a good part of that includes and gets piled into the homeowners side of things, and the HOA stuff, because everybody's within a community, and the communities now have to have these withholdings, and there's these, all these new assessments coming up, because there's all these new needs to be met. And you know, everything is kind of out of date, and there's a lot of need for stuff to be caught up and brought up to the what is new code now, they don't want it just repaired back to how it was. They really want everything brought up to new code, because they don't want to keep recurring damage, right? Like
Sergio DeCesare:that 50% rule. But, you know, I think General is completely
Rick Kooyman:out of line. It's very difficult, yeah, very difficult. But, you know, there's, there's reason for it, but you know it's, it doesn't favor the owner or, you know, the resident. You know it's, it's, it's very difficult. So caught on it, yeah,
Sergio DeCesare:well, so while we're on the topic, before you move on to to the differences in the contracts, in your opinion, what is the minimum amount of time for inspections down here?
Rick Kooyman:How long they need? At least 12 days if you know who you're going to work with as an inspector, and you know that's a good conversation to have. Just like when you're getting and finding the realtor you want to work with, you should be looking for the inspection company you want to work with, too, and get to know who you want to do that with, because that's a very important part of the process. And, you know, I guess it gets overlooked too many times it so
Sergio DeCesare:it's the parties who have the most vested in it, right? So realtors are like, no, no, no, gotta buy. Gotta buy, gotta buy, right? How many times have we heard that's the greatest time to buy real estate hammer, right? And we all know that's not necessarily the case, depending on what your needs are, but so yeah, so I don't think I've ever written a contract for less than 14 days, and
Rick Kooyman:now oftentimes that's comes up short for people. 12 days. Like you said, the 14 days is two weeks is much better, because there there's a need to follow up my report with the contractors in the various fields to at least give estimates, if not do some of the needed repairs. Again, depending on which contract you use, there's a defective items, list of stuff that the seller is required to repair, to facilitate the closing, as per the contract, or not, or not. And you know, again, far bar versus neighbor, right? You know it's, it's in there. And you know, the buyer and the seller often times don't realize their responsibilities, you know. And they sign these contracts, and they don't realize that they have a responsibility, as the seller, to fix the leaky roof. It says so in the contract, if it's leaking, you have to fix it, you know. Or if there's radon over the active action level of 4.0 you're required to remediate it. Well, yeah, termites, you know, but in some contracts, it's excluded, and in others it's not. So these are big deal items that get lost in the black pipe,
Sergio DeCesare:isn't it? Invariably the remedy to that as as you get on, I'm won't tell people how to deal with that. But go ahead. Okay,
Rick Kooyman:well, let's just look at the far bar says, is what is defined like a property condition, right? And this is, I'm just basically work reading straight from this older contract. And I'm just going to start midline and somewhere, and it says, you know, working condition defined below, torrent screens, including pool and patio screens, fogged windows and missing roof tiles or shingles shall be repaired or replaced by seller prior to closing. Seller is not required to repair or replace cosmetic conditions defined below, unless the cosmetic conditions resulted from a defect in an item seller is obligated to repair or replace working condition. Now, this is where it gets defined, right? So this is the defective item. What is it? And it means operating in a manner in which the item was designed to operate. Now, how do we interpret that in our world as an inspector. And how do we, you know, like we train people, is it performing its intended function? Is the words we use, right? Is it doing what it was manufactured to do in the way it was manufactured to do it? And that's often part that gets kind of argued with in the way it was intended to be used.
Sergio DeCesare:Give me an example like, give me give me a
Rick Kooyman:again. It's, here's an easy one, the kitchen faucet. You know, it's, it's broken off. It's hanging loose. But you turn it on, it turns on. You turn it off, it turns off. It still works. Well, are you required to fix it or not? Well, in my opinion, it's not intended doing its intended function. It's broken. We all know that that's not how it was manufactured. It was not intended to use be used that way, and it's going to result in a cat water problem, inevitably, because it was damaged from how it was intended to be used. So it's defective, but these are the differences in wording and approach. And you know, oftentimes, there are a lot of realtors out there that will talk their way into the mind of the inspector to get them to do what they want to do, and that is get to closing and and oftentimes that's representing the person
Sergio DeCesare:that doesn't want to pay for the problem, right? It's also bit of self interest in there too, right? Yeah, for sure, for sure.
Rick Kooyman:Right? So cosmetic condition means esthetic imperfections that do not affect working condition of the item, including, but not limited to pitted marsite tears, worn spots and discolorations of floor coverings, wallpapers, window treatments, nail holes, scrapes, scratches, dents, chips or caulkings and ceilings, walls, flooring, tiles, fixtures, warm years or cracked or minor cracks in walls, floor tiles, windows, driveway, sidewalks, pool decks, garage patio floors, cracked roof tiles, curling or worn shingles or limited roof life shall not be considered defects. Seller must repair or replace so long as there is no evidence of actual leaks, leakage or structural damage, right? So therein lie. $100,000 on most homes. That's a that's the difference. You know, on most homes we have down here, they either do or do not have a new roof. And if they do not, they need to. And it's not how old is the one that's on there? It's the picture. Yeah, they want to I'm having enough
Sergio DeCesare:insurance rates, right? How do you know it's defective? Unless you get someone like you to crawl up in the places nobody wants to go,
Rick Kooyman:right? And then in the insurance side of it, we are required to actually go in the attics and look for those indications of roof leakage in the attic. It says on the form, there's a checkbox, are there indications of past or present staining from roof leakage? And it doesn't say it does. Is it wet, right? It says, Is there indication past or current active leakage or staining? Right? That I can't tell you how many times I've told people to paint the damn stain because they want to know that it's not continuing to go on. And otherwise the photo is what the photo is, and that's how it gets written up in the underwriters world. And when you go and try to file a claim on it, they're going to go back to that four point document. They're going to go back to those photos, and they're going to use it in their favor again against you. So again, it goes to you know, why do you want to pay more to have an insurance inspection done than the cheapest guy in town? Well, because the accuracy of that document matters to your policy greatly, like the everything about it is based on how well that guy does his job. And you're going to find out when it's time for you to actually want to make a claim and and then you're going to be too far down the road for that guy to be part of why you got problems. Right? That's thus starts the
Sergio DeCesare:discussion of, Rick, you're killing my deal. There you go. There
Rick Kooyman:you go. And you know, there's also an interesting clause in here, in the in the far bar contract that that is intriguing in regards to how people can deal with a difficult inspection, right? So, you know, oftentimes I had a customer call me once and ask me if I was that amount of fur that did the inspection on said property. And I looked it up, and I said, Well, it appears to be that we did do that inspection for that property. And she said, Good, I want to hire you for this house we're looking at buying. And she said, that was my house, and I hated you, but now she knows who she wants to call when it's protected but interesting, and that topic of an agitated homeowner who who's dealing with an inspector that they don't like, or vice versa, a buyer and they're not getting what they want from the inspections, you have a right to have a second inspection. You know, the other party can request an inspection from another inspection company, and the two reports can be compared, and if there's variations, there is actually a clause that says, well, they're in there. There can be a mutually agreed upon third inspection party that everybody just agrees they're going to agree to, right? I don't know how you ever get to decide on who's gonna it's like, you know, right? I mean, but this is the stuff that's in these contracts that you know. It's interesting to know what you're signing. You know that you know, if the buyer and seller's inspections report different and the parties cannot resolve the differences, the buyer and seller together sell twos and equally, split the cost of a third professional inspector whose written report shall be binding on all parties.
Sergio DeCesare:Well, this sounds like an arbitration Yeah, by Inspector. Yeah, wow, oh yeah. Used to hire the right guy the first time around, doesn't
Rick Kooyman:it? Though? I mean, don't, don't you want to be on the right side of that argument, if you know and what
Sergio DeCesare:most people need to understand. And I hope there's some realtors listening to this too. You know, it's not about killing the deal, right? And I understand that maybe you're representing the buyer or you're representing the seller in this respect. And if you're representing the seller, you should have gave them an option of getting a home inspection done prior to listing that property. So none of this stuff would ever come up, right? It's already disclosed
Rick Kooyman:care of or it would be disclosed. Right? There's so many advantages to the previous or the listing, so I'm
Sergio DeCesare:a firm believer in having one of these inspections done. Them before you list them properly. But if you're on the buyer side, why would you want to sell your buyer with a problem like that? Why wouldn't you just look at point of negotiation, come to an agreement, you know, mediate the problem, negotiate the problem. That's what you're paid for as a realtor. You're not here to take orders. You're not here to throw it up on the MLS and and hope somebody else sells it and you get a check. And by the way, that's not even allowed anymore due to the new regulations with with, you know, Nara and foreign and the Justice Department. Point is, why would you walk around with an attitude at a guy who's just trying to make sure the buyer spends his money in the best possible way. Why?
Rick Kooyman:Ultimately, you would wonder why that is but at the end of the day, the the answer is over and over again, the same, it takes longer to get to the paycheck for them, and most people don't want the delay. And how many things gotta get resolved before the parties can agree or move on. You know, as a broker, often times, I've heard so many realtors say, I want the inspector that gets everything done the first time, and everything's right, perfect. And I don't mean that the reports good. I mean like they never find anything, like they're the easiest reports. Everything's always great.
Sergio DeCesare:Well, then problems, let's go, Yeah,
Rick Kooyman:it's so easy. I give everybody to closing the first time we go right through it. It's great. So easy. These your Realtors should not be there to facilitate contracts being passed across the table. They should be there to represent your your position in this deal, and and do the things that they're professionally in the industry, to look out for you when you're not in the industry, to know to do for yourself. You know
Sergio DeCesare:what? With the recent passing the new laws, you know, I, you know, being a broker for 30 plus years, I ponder, sometimes, the ultimate outcome of whether or not buyers, brokers or buyers, agents are going to be going away. Because, quite honestly, if you take the same attitude you had before that rule change, there's no point in having you around. You know, these days, someone wants a house, they go to Zillow, they got a Redfin, they wake it up, they can deal directly with the seller, right? If they're going to have an attorney look over the contract and close the form, the attorney can negotiate price. Okay?
Rick Kooyman:So there's a lot of things that often times better off with the attorney on the contract side of
Sergio DeCesare:things. It's a good deal. You know, don't worry about this. You just, you just got taken advantage of my opinion. Yeah,
Rick Kooyman:I absolutely agree with you on that. I absolutely do. And then I glad you bring up the change in the, you know, the the the legislation changed to try to favor the the buyers, to protect the buyers and and the interest and idea of a buyer's agent, in my opinion, is conflicted, to say The least.
Sergio DeCesare:Yeah, you know, there's a weird, weird history behind it. I gotta be honest with you, most people don't know this, but you know, 2030, years ago, like when I became a broker, like right now, agents are what they call transaction they're not supposed to represent a party, right? This is what we heard
Rick Kooyman:from well, and
Sergio DeCesare:it's wrong, because back in the day, when they became a broker, believe it or not, and people were listening, I tell Realtors this all the time, who haven't been a broker or an agent that long, I said back in the day, both sides of the transaction, the buyer's agent and the seller's agent represented the seller
Rick Kooyman:for sure, the seller for sure, right? But
Sergio DeCesare:they always gave the the impression that, oh, you know, all right, yeah. Then they started getting nailed for it. They started, you know, people started suing, saying, wait a second, you wrote the contract. Why didn't you tell me this? Why didn't you tell me that? So then they changed the law. So, okay, we're not representing any party now. We're representing the transaction, which, for God, for all these years, I still don't know what
Rick Kooyman:that means. Yeah, we're just going to resolve everybody needs, right?
Sergio DeCesare:Yeah, right. They went to transactional in representation and fiduciary duty, and then now, all of a sudden, I'm hearing now that with the with the law change, they're going back to, you know, the buyer's agent represents the buyer's best interest. God help them.
Rick Kooyman:And then the sellers and the sellers best interest, yeah, and you so now we have an adversarial
Sergio DeCesare:relationship, and you should have a contractual
Rick Kooyman:agreement with your agent if you think you have a buyer's agent working for you, and you need to understand it. Exactly what the expectations
Sergio DeCesare:are, yeah, a good one should be able to save you way more money than what you're paying the buyers, the buyer's agent to represent, but, you know, yeah, much like
Rick Kooyman:we're, you know, you might think my inspection reports are expensive, but the money that I'm saving you in the negotiations is, you know, 100 fold of what you paid me, and that's exactly what your representative should be doing for you. But in this transactional way of doing things, the money is the driver of the thing, and everybody wants to see the coins passed across the table. And it's not about making sure that everybody's clear on what they're buying. It's about getting it done, and done is good and good is not always done, as I say,
Sergio DeCesare:well, not to put too fine a point on it, but I hadn't introduced higher brokerage agreements as a young broker. I learned it from a gentleman in Arizona back at the time, and this was going back. This has to be 8889 maybe even before that. But this shows you how old I am. But I was representing buyers here, which you could do, as long as it was disclosed, right? You had to tell the civilization I'm representing this guy here with the money, right? I can't tell you how many times agents listing agents told me to go pound sand or Well, if you're representing want to deal with it, you're representing him. We don't want nothing to do with that. And you can have him at your commissions, even though there was a co broke on the property. So in essence, I would have to have my buyer pay me. He would have to pay the price the seller would have to get. And back then it was 7% not 6% and he would end up getting a full 7% and I'd have to get it from the I mean, what crack of shit? No, at the it's part of my French. But really is that what we're here to do is just screw people open,
Rick Kooyman:yeah, yeah. And in today's name day and price of everything in this world, you know, again, the the buyers agreement is, you know, a new thing. And I think it's a good thing in that regard, that it points out the clarification needed in the representative and what your expectations should be, and you should, you should know, going into them, you know, we're going to pay 30 grand on on a million dollar home to our agent, and that's, you know, what this contract agreement says. And if that's the case, you should be getting 30 grand worth of service. Well, the realtors
Sergio DeCesare:are highest paid people in that in that whole chain of events, aren't they? And you and I both know people who have sold houses or or wrote a contract for somebody and then took off on vacation and trying to get a hold of them for for an inspection and get them to make a phone call while they're on vacation. Yeah, they're on a cruise. We're on a cruise, or, you know, third time this year. They're not, you know, available among people. You're making 30 to $60,000 on a, on a, you know, as a commission, and you can't, you can't facilitate
Rick Kooyman:this matter, and actually have an investment in the customer that you're supposed to be representing, and not just shopping for that new car, right, right? You know? And that's a funny story. I said that to somebody the other day. I said, you know, I it was a family member. I said, Imagine this. You're I come up to you, and you're a realtor, and I said, I want to buy a new house. I want you to help me buy it. And you go, okay, great. What's your budget? And I go, you know, 800 maybe a million, let's keep it there. And you go, Well, that's good. I'm going to need you to buy me a Jeep Cherokee when we're done. Would you be like, That sounds reasonable.
Sergio DeCesare:Million dollar property. That's probably pretty well,
Rick Kooyman:I mean, but you don't, if you don't know it ahead of time, you see it on the closing documents, and you're like, Good lord. But again, if you know it ahead of time, you might demand more from the people you're working with too.
Sergio DeCesare:Yeah, and, you know, to be fair, I mean, look, I've been this business long time. I never felt and back in the day it was 7% now it's six. I don't think, especially now in the market, that's trending downward. You know, for you to get 6% of somebody's equity just for putting in the MLS. Okay, I have a problem with that. Always did, yeah, did. There's not the time balance isn't really and then they say, well, it's dollars money, but now ultimately it's the buyer's money, isn't it? Yeah, ultimately it's the buyer's money, because if he didn't have to pay. Or that commission for the seller to pay, he could probably,
Rick Kooyman:yeah, try negotiating. And that was the argument with this whole realtor change. You know, that was the collusion that REMAX got to pay on that argument.
Unknown:But, you know,
Rick Kooyman:let's move on. No know what your liabilities and exposures are. And you know, like when I ask your people ask me to call and ask, how much is the inspection? And they want to know, Well, why is it cost? Why are your prices higher than everybody or else, or I'm at the top? Maybe I simply ask him, well, what's how much risk are you willing to take? You know, if you, if you're not looking to spend a bunch of money down the road of an unknowing occurrence, then an extra 100 bucks today is probably not expensive. Yeah? Well, let's be clear, we're not talking like
Sergio DeCesare:you're asking$2,000 for an inspection. You're only I'm not even asking one person, yeah, you know what I'm saying. So, you know, comparison, 10th of a percent
Rick Kooyman:permission rates. I mean, it's ridiculous, right?
Sergio DeCesare:Using you versus using a competitor, we're talking about one to 200 Oh, difference maybe,
Rick Kooyman:yeah, right. And, you know, and again, everybody is says the same thing afterwards, I'd never go anywhere else, right? And nobody does it like he does it, you know? And again, I don't, I'm not trying to, you know, toot my own horn. But the reason I got into doing this was to do that. So we're just, we're I'm just doing the goal we set out to do all
Sergio DeCesare:in the mission statement. Alright, you have anything else you want to say about either one of those contracts, and
Rick Kooyman:yeah, one thing in in finishing up and pass the inspection period is, is actually you are obligated, or righted in your contract to do another walk through inspection prior to the closing to confirm that you know the agreed upon things are as they should be. And you can also have it revisited by an inspector at that time, if you're not comfortable in confirming those things. And also outside of what is generally included in many inspections is the permits on the history of a structure and the update histories and stuff like this. And it's a big thing that needs to be not overlooked. And in the contracts, it's spelled out who's responsible for, say, the cost of getting an open permit closed, you know? And in some cases it's the seller. In some cases it's not the seller. And you know as is contract for sure, if you're on an as is contract and you're buying a residential property, you are buying those open permits, you are buying those code violations, and that's on you to fix. There is no
Sergio DeCesare:about that. The county will come and and
Rick Kooyman:that's when people actually come, because people now are finally looking at, well, how did this old house get to look brand new? And there's like, no new permits on file for anything, or maybe the only thing there is, is a roof permit, and the whole inside of the house is brand new. Insurance wants a new four point with all the photos. And they want to know, well, how old is that stuff? Well, one of the main ways they want those fruit is through county records, right? And then, if the county records aren't there, flags start to go up.
Unknown:So oftentimes
Rick Kooyman:it gets brought out in the transaction side of a real estate deal.
Sergio DeCesare:Well, that's what, that's what title services or title searches are for in open permits, absolutely. Sometimes, sometimes things are done to a property without and you got,
Rick Kooyman:that's what I'm saying, and you look at on the record and you're like, wait a second, right? But it's not just that the stuff on record is correct. It's that the structure matches what's on record, and that when you buy a property on an as is contract that looks modern and updated, you are buying the inspections that didn't get done also, which is generally, we want that taken apart. We want the walls opened, Oh, yeah. We need the rough end inspections completed. We want all the junctions fittings exposed and inspected and signed off by our county inspector, and then you can put it back together. And when you're done, we'll come back and verify that you get that to an acceptable level the way, there are fees involved with that, and there's a fee in there, and there's a fee for not having it done at the right time. So yeah, and you're buying that problem, it's, you know, you might find out after closing, because, you know, it was done without a permit, and it. Come up on the closing discussions. That's right.
Sergio DeCesare:That's right. Well, one thing I'll say before we wrap it up, so the remedy, from a contractual standpoint, is an addendum, addendum to a far bar, an addendum to a neighbor contract, because all language on an addendum, particularly with FAR bar contract, supersedes everything on the contract. So if you're a buyer, and you go in there and you say, You know what, I don't like the language of this contract, I really don't want to be responsible for that, you are allowed to put that as an addendum. When you make the offer as part of the deal, sign it or accept it absolutely holds. And I can't even tell you every, every, almost every contract I write has the addendum of some sort on it, because even though, if it's in the contract and it's vague, I'm going to clear it up an addendum. There's going to be no questions asked about that on a lot of times, when we flip properties with the banks, we put, you know, basically the addendum became the contract. It's
Rick Kooyman:a weird way. And, you know, it becomes the contract. This is a great key cue to know when you're working with the right people and not because oftentimes you're just going to get a contract with no addendums. They just fill out. They check the money, just like you said, if I write a contract, it almost always has an addendum. It's like if I write a report, I'm probably going to find something right? It might be a little thing, but very rarely is there nothing wrong with the property. Very rarely is a contract exactly perfect for that deal, so yeah, there should be some tweaks or addendums to it, and just because they're at the end, like you said, they supersede the original language of the contract. And it's all you know, part of the negotiation process. And if these things aren't being brought up or looked out in your best interest, that that should be a red flag to you.
Sergio DeCesare:An example, too, would be like on someone's contracts, you're saying the the the occurrence of penicillin,
Rick Kooyman:Aspergillus, penicillin, right, doesn't void the contract. But you could put in the addendum. And the addendum, any, any mold, any fact, any mold found, regardless any allergen, invalidates this agreement, right? Because, ultimately, in the world, in the world of mold and law and transactional things there, you know, there's basically three, what they call toxic molds, which is stacky about tree Aspergillus, Penicillium and chitonium, and then there's like 20 other molds that get counted or identified, but they're called allergens. That means they just annoy the hell out of you. The top three will literally affect your health and put you in the hospital. And one of them's that Aspergillus that is literally written out of the neighbor contract, which, you know, like you said, you can simply put it in an addendum and say, any mold of any nature, and that gets over the allergen thing, in my opinion,
Sergio DeCesare:not that we expect, you know, these air quality tests to come back 100% perfect. Let's
Rick Kooyman:say you're not buying a clean room, man, you know right before me, but at least you have an option, you have an out if you want to take it, and you have an option, yeah, exactly. You have that right to cancel, right, which is present in the as is contract, but you better know ahead of time that you're okay with not exercises to cancel.
Sergio DeCesare:The last thing you want is, is being sued for performance because some realtor did not read you the correct, you know, choices on the contract, and now you're stuck buying a house with just a little bit of Aspergillus, and, yeah,
Rick Kooyman:and you happen to be highly allergic to it, or, you know, just COVID transplant, or something Sure, no immune systems compromise. You know, you you can't even begin to be in there,
Sergio DeCesare:right? So what did we learn here? We learned that there's two, two contracts with very different language on it. We learned that anything you want to, you know, kind of keep an eye on, or if you don't like the language in the contract, but you can add an addendum. And thirdly, I think, is absolutely positively, have an inspection done, preferably by Rick. And lastly, I think the last thing we can say is, you know, what, if you're thinking about selling or or you're on the market now, and you don't want to get COVID with your pants down or something like this. Have an inspection done right now.
Rick Kooyman:Get that listing inspection done. Get covered. It makes a and with this stale market, it helps facilitate the sale. To say, you know, we've got a full inspection detail. We got a clean report, even if it's not clean, here's what it is.
Sergio DeCesare:Yeah, but you know what, if you have the inspection, there are some things you can clean.
Rick Kooyman:Yeah, absolutely. But now there's a lot of properties that get turned over because, you know, people have passed on, and people are out of state that are selling them, and there's, you know, a big disinterest in the actual property. There's just interest in the value. And even there, the investment in that listing report is a value, because even if you don't want to do the repairs, it facilitates the offer getting accepted and going to closing. So it just simplifies the whole transaction. From the beginning to me,
Sergio DeCesare:it's kind of like a title if you pay a couple of 100 bucks that you're going to end up paying at a closing for a title report, right? Two, 300 bucks, whatever
Rick Kooyman:it is at the last minute,
Sergio DeCesare:well, but that's your Yeah, but that's also telling you if you can actually own this free and clear, if the title report comes back and says, yeah, no, we've got title problems. Here. Are you gonna run out and just say, yeah, let me buy it. Yeah?
Rick Kooyman:No, absolutely no, right? But you know, you could do that on the seller side of things too, is, you know, get your title exam, spend a couple 100 bucks and say we even got the title cleared. You know, we've got the EP reports. We, you know, whatever it might be, but you know, getting things done to facilitate selling the property is advantageous. Yeah, free listing, listings, you know. And you know, we get, we get, also, our, our, our inspection reports come with that 100 day warranty program. So, yeah, why don't you tell them about that before we close out? That's, that's, that's good for the homeowner, that that's whoever we're writing that report to. So you know, if you're the the seller on the property, and we come in and write an inspection report, and the inspection report says set items were functioning and in working condition at that time, and then the the buyer's a inspector comes through and said, you know, said faucet is broken now and doesn't work. And I said it was working. Well, you know, under our policy, our coverage, our 100 day warranty program, you know, you you're going to get that paid for and fixed, because they're, they're the our program is, and is built to facilitate that coverage of the gap problem, you know. So it's intended for its purpose, right? And it does happen, and it does happen, and there are changes and you know, and it's, you know, like everything in the insurance world, the reason that it works for them is it's a game of numbers. So we buy enough of them that ultimately they're willing to pay out on it when they have to
Sergio DeCesare:right? Well, it's like anything else. It's all about mitigating the risk, not just from the insurance company standpoint, but it's a buyer. You're mitigating the risk as a seller. You're mitigating the risk as a homeowner. You're mitt getting risk. That's what warranties and stuff are all about. All about excellent conversation. Rick, I hope somebody gets something valuable out of this and implements it right away. Why don't you give them your contact information?
Rick Kooyman:And absolutely, very good time talk. And that was, you know, really good conversation. I agree. I hope people take a moment and and delve into this a little bit. But yeah, if you want to reach out to me, please, 239-537-1186, you you can look us up online at trade secrets inspections com. You know, you can find us anytime you want. You could text me whatever you need. Just give us a call. I'm here to help. Very good, alright,
Sergio DeCesare:Rick, thanks so much again. Awesome information, and I'm sure some people are going to get some benefit out of that. Keep on the good work, and we'll see you next time, till the next time you.