The Blog

If you are a real estate agent in anywhere in the entire state of California, then you may definitely find this contract information very helpful.

A few weeks ago, our transaction coordinator had a conversation with a local listing agent who said that her seller was extremely mad because the buyer planned to conduct a home inspection and the home inspection was not noted on page 2 of the Residential Purchase Agreement (RPA-CA).

The Allocation of Buyer and Seller Costs

Let’s clear the air: Page 3 of the RPA-CA includes an allocation of costs. The allocation of costs can and may be negotiated on a counter offer or subsequent addendum. However, page 3 of the purchase agreement is by no means an exhaustive list of everything that the buyer is going to pay for—all of the buyer’s inspections that he (or she) is going to conduct—prior to closing. Within the due diligence period, the buyer has the right to conduct inspections—even if they are not noted on page 3 of the purchase agreement (just as long as s/he plans to pay for those himself).

According to this transaction coordinator, the most common items requested from the allocation of costs are escrow, title, natural hazard zone disclosure report, transfer tax, HOA transfer fees, and home warranty. Of course, there may be other costs associated with the transaction, such as pest inspections, well and septic inspections.

The thing to understand is that it is in everyone’s best interest that the buyer conduct all the due diligence activities that she or he desires. Think: what might happen if the buyer was discouraged from conducting these inspections? If a buyer learns later about some unknown fact that could have come up in an inspection that she or he was discouraged from conducting, this could lead to all sorts of legal accusations. So, even if it inconveniences the seller, it’s always good practice to allow the buyer carte blanche when it comes to inspections and due diligence activities on the purchase of a home.

Need help working your transaction file? Feel free to contact the team of transaction coordinators at Transaction 911.