The Document Seller's Agents Need to Order
The horror stories are legion. The house is placed on the market, the buyer makes an offer, negotiation ensues, agreement is reached, but the deal fails because the title commitment shows the property is over encumbered or has some other “cloud” on the title which delays or prevents the seller’s ability to sell. A few years back, one of our Agents representing a buyer ran an O & E before they wrote the contract offer. It was revealed that there was an IRS lien, which affected the negotiations in a positive way for our buyer. The Agent representing the seller was unaware of the problem, which placed her client in a poor position to negotiate. The seller's Agent did not well represent her client’s position because she did not properly research the property before exposing it to the market.
In another case, the listing agent took the owners word on the outstanding mortgage balance without properly researching the title. The O & E ordered by our buyer’s agent demonstrated the house was not salable at the listed price, killing the deal before the buyer’s inspection, saving the prospective buyer the expense of such an inspection. While the Title Policy Commitment would have shown the IRS lien, the commitment date was 2 days after the inspection date.
So, what is an O & E? The initials stand for "ownership and encumbrance report", which can be obtained quickly from most title agencies for a nominal fee, usually $5.00. The reports shows parties in title, outstanding mortgages and liens. This basic data can often prove useful in a negotiation, or serve to halt a bad deal quickly, without waiting for the issuance of the Title Commitment.
Sadly, many listing agents do not use this basic research tool, often at the detriment of their client. Why? Often because they have not been well trained, or just don't want to spend $5.00. Selling real estate has never been more complex, and often it's the little things which make the difference between a successful sale and closing, or a mess that creates frustration for everyone involved.
In our next post, we will begin to discuss the Title Commitment, and what Buyers, Sellers and Agents should know about that important document.
- Larry McGee, Broker
The Berkshire Group