Real Estate

Building Your Dream Home

October 12, 2018 by khproperties Leave a Comment

Have you ever considered a custom home construction? Building your dream home from the ground up? Starting from scratch, choosing every detail, and creating something that is perfect for your needs? From building your garden to designing kitchen cabinets? Many people dream of the day they can build their own home. It’s an excited thought to be the first one to live in the home, but also the one who made all of the decisions that give the home its character.
Building a home is not an overnight task and will take some planning, but on move-in day, you can look back and think of all the moments and decisions that got you here today. There are some things to consider to get you prepared to build your new home and we thought we’d take a look at some of the items you’ll want to consider.

Get To Know Your Builder

Hiring construction jobs is your first step, get to know the local builders in the area. This is one of the many areas a Realtor can become your best friend during the process. While you may feel you could save a few bucks going it alone, the experience and knowledge of your agent combined will be invaluable. And that’s only the beginning. To get to know the builders you should look at their inventory, but also take a look at some of their older homes (ask your agent to find some currently for sale). How have they held up over time? What are the locals saying? Do you know someone that owns a home built by the builder? What do they think? A builders’ reputation is everything and word travels fast.

Stadler Custom Homes Builds Home for Charity

October 2, 2018 by khproperties Leave a Comment

Stadler Custom Homes is building a new home in Hidden Canyon, one of Stone Oak’s newest neighborhoods, to benefit the Military Warriors Support Foundation and the San Antonio Food Bank. The home at 650 Winding Ravine is starting to take shape and we can’t wait to see the finished product. Ray Stadler has been building new homes in the San Antonio area since 1995 and has been very active in giving back to the community. While we wait for the home to be finished, check out the video of the footprint of the home and the surrounding land in this drone shot aerial video.

McNair Custom Homes in Hidden Canyon

September 6, 2018 by khproperties Leave a Comment

McNair Custom Homes is one of the preferred builders in Hidden Canyon and if you’re looking for an energy efficient home, they are hard to beat. Top that off with impeccable style and design features and you can truly see why McNair Custom Homes come so highly recommended. The combination of a McNair built home along with the terrific location of Hidden Canyon in Stone Oak will surely make you fall in love with your new address.

Hidden Canyon has everything a buyer is looking for – scenic views, controlled access, excellent recreational facilities, highly desirable Northeast ISD schools, and the shops and dining options of Stone Oak at your doorstep. On top of all that you will have a home built by McNair Custom Homes designed around energy efficiency, a signature of their building since 2009. McNair Custom Homes offers you some of the most energy efficient homes around. Each home is HERS rated and comes with a two year heating and cooling guarantee. The HERS rating is a mark of how energy efficient a home is, a standard home built to code is set as 100 on the HERS scale. McNair Custom Homes average a HERS rating of 66, making them about 34% more energy efficient than a normal home (the lower the score, the more energy efficient the home is). In addition to the money you’ll save on energy costs, you’ll also save when building, as McNair Custom Homes offers many standard features that other builders would charge a premium upgrade fee for.

If you’re interested in learning more about building in Hidden Canyon with McNair Custom Homes, give us a call and we’ll set up a tour of some homes they already have built as well as arrange for a meeting with the McNairs to discuss how they can build your dream home in the Stone Oak area.

Submitting a Backup Offer to Buy a Home

November 9, 2016 by khproperties 3 Comments

You love the house, but just found out it’s already under contract. What can you do? Time to think about submitting a backup offer. In Texas, we have the Addendum for “Back-Up” Contract that helps us write up an offer that can be signed off on and secures the buyer a second place position to purchase the home. While no one likes to play second fiddle, the backup offer (which becomes a backup contract once all parties sign off on it) secures the second set of buyers the home should the first contract terminate. Backup offers are often used in hot markets when homes are flying off the shelves and also when we see a lot of homes being bought contingent on the sale of another home. Let’s dissect the Addendum for “Back-Up” Contract and see how it works.

Addendum for “Back-Up” Contract

A. The contract to which this Addendum is attached (the Back-Up Contract) is binding upon execution by the parties, and the earnest money and any Option Fee must be paid as provided in the Back-Up Contract. The Back-Up Contract is contingent upon the termination of a previous contract (the First Contract) dated _______________ , ____ , for the sale of Property. Except as provided by this Addendum, neither party is required to perform under the Back-Up Contract while it is contingent upon the termination of the First Contract.

Section A starts off starts off as a sort of preamble to the addendum, explaining what it is that the form is doing. This section sets up the backup offer to become a backup contract. If all parties sign off on the contract along with this addendum, it becomes a legally binding contract to purchase the home, just like any other contract, except it puts in the requirement that second contract (the backup) becomes contingent on the termination of the first. The last sentence effectively places on hold all performance requirements of the contract (except those mentioned here in the addendum), until the first contract terminates.

It is important to note, that while the contract is effectively put on hold by this addendum, the contract is still considered to be executed on the date of the contract (ie now rather than later) and is a real, legally binding contract. Many people think of it as a “handshake” deal, but this is dangerous thinking. As a buyer, you are legally obligated to buy the house now and the seller is legally obligated to sell it to you as long as the conditions set forth in the addendum occur, and there is no walking away just because you found something better.

Earnest money and the option fee are both paid as usual and the contract is to be submitted to the title company (not held onto in a drawer somewhere – yes agents, we’re looking at you!). The buyer effectively begins their option period (if they elected to have one) – we’ll discuss that a bit more in depth below.

B. If the First Contract does not terminate on or before _______________ , ____ ,the Back-Up Contract terminates and the earnest money will be refunded to Buyer. Seller must notify Buyer immediately of the termination of the First Contract. For purposes of performance,the effective date of the Back-Up Contract changes to the date Buyer receives notice of termination of the First Contract (Amended Effective Date).

The backup offer is now a backup contract and this section puts a clause into place that requires the first contract to either terminate on or before the date listed or the backup contract will terminate. It requires the earnest money to be refunded to the (backup) buyer if it is terminated. The option fee is not refunded as the buyer paid for the right to terminate the contract – not for the act of terminating itself. Logically, the seller must let the buyer know immediately about the termination of the original contract, as it affects when the backup contract moves into the first position and becomes the “active” contract.

Most importantly, the effective date (which is written on Page 8 on the 1-4 Family Residential Contract and is the date when all parties agree to the terms of an offer, sign off on it, and effectively turn it into a contract), is amended to be the date that the backup buyer receives notice of the first contract’s termination. We often describe the effective date as the start of the clock. The minute a contract is signed off on and executed, all timelines are based on that effective date. With the backup contract, you have an effective date on the contract, but it is reset once the contract loses its backup status and moves into the primary position, essentially restarting the clock.

C. An amendment or modification of the First Contract will not terminate the First Contract.

This is pretty simple – if the first contract is modified or amended, it does not terminate it. That contract can be modified or amended as much as needed during the course of its life. This section makes this item clear to all parties so there is no room for disputes later.

D. If Buyer has the unrestricted right to terminate the Back-Up Contract, the time for giving notice of termination begins on the effective date of the Back-Up Contract, continues after the Amended Effective Date and ends upon the expiration of Buyer’s unrestricted right to terminate the Back-Up Contract.

This is a big one. The option period has a timeline (determined by the contract – it is a negotiable amount of time) and it is based on the effective date. However, when in the backup position, all performance items are effectively frozen in time (see Section A.) and the option period is no different. While in a backup contract, if the buyer has paid for an option period and the unrestricted right to terminate, that option period is in effect from the day the backup offer is executed and turned into a backup contract and continues through the time they are in the backup position. Once the first contract is terminated and the backup contract becomes the primary contract, the effective date is amended (see Section B.) and the timeline for the option period is reset to work from that amended effective date. This gives the buyer a much longer option period and allows them to restart their option period once they become the contract in play.

E. For purposes of this Addendum, time is of the essence. Strict compliance with the times for performance stated herein is required.

Like all real estate items that have timelines based on the effective date and performance items, time is of the essence. This statement serves to notify all parties that there is a ticking clock and that certain items are based on performance within specific timelines – failure to perform those items in time could have legal consequences. This is a common notification on real estate contracts as many items in the contract must be performed in time in order to avoid negative consequences.

A Few Notes About Backup Offers

Can I make a backup offer if there is already a backup contract in place? No. Only one backup contract is possible at any given time.
Should I conduct inspections while in the backup position? No. As the option period timeline resets once the effective date is amended and you are placed in the primary position, you will still have the normal timeline (as negotiated in your contract) to perform inspections.
Where do I get the effective date of the first contract to put in Section A. of the addendum? The listing agent can provide this to you. Do not leave this blank.
What date goes into Section B. determining how long the backup contract is in effect? This date is up to buyers and can be negotiated by both parties. It functions as a statement of how long the buyer is willing to wait to find out if they are “getting the house” or not.
The backup contract doesn’t need to be submitted to title, right? Wrong. The backup contract, along with the earnest money, should be submitted to title just like any other contract. It is not something to be “held onto” for later. The seller should also be given the option fee and the check should be deposited by the seller. It is theirs to keep (the buyer is paying for the right to terminate, not the act of termination itself.

image courtesy of Son Of Groucho

Time is of the Essence: What Does it Mean?

November 7, 2016 by khproperties Leave a Comment

The phrase “time is of the essence” is used often in real estate contracts and we’ve mentioned it numerous times in our posts breaking down real estate forms and addenda. What exactly does it mean and what are the implications to buyers and sellers when they are reminded that time is of the essence in a real estate contract? For our example purposes, we’ll be speaking in terms of the 1-4 Family Residential contract, although the verbiage appears in multiple places on different forms and addenda. The same concept will apply to anywhere you see “time is of the essence” written, but if you have a specific case or question, as always, we recommend you contact your real estate agent or if there are serious legal questions being asked, call your attorney for legal advice.

Time is of the Essence: The Clock is Ticking

Simply put, time is of the essence is a legal phrase used to remind all parties that the clock is ticking. The legal dictionary section of thefreedictionary.com defines it as:

Time is of the Essence. A phrase in a contract that means that performance by one party at or within the period specified in the contract is necessary to enable that party to require performance by the other party. Failure to act within the time required constitutes a breach of the contract.

In real estate contracts, the time that we’re talking about is based on the executed contract. There are quite a few important performance items that hinge upon time – from the option period to delivery of documents to notices and things like ways to terminate…even the closing date itself. All of the dates in the contract are rooted in the executed date. And as time is of the essence, failure to comply with those dates and timelines could have serious negative consequences, some of which can be considered breach of contract and have much larger legal consequences.

In the 1-4 Family Residential contract we use in Texas, this executed date can be found on Page 8. That date is the mother of all dates and is considered to be day zero – where the clock begins ticking.

Time is of the Essence: Example

Let’s say for instance you executed a contract on February 3, 2017. In that contract you have 3 days to deliver the survey and T-47, a 10 day option period, and a financing period of 14 days. That would mean that on (or before) February 6, 2017 you would need to deliver the survey and T-47, on February 13, 2017 your option period would expire, and after February 17, 2017 you would no longer have the right to terminate the contract because you could not get financing under the terms laid out in the Third Party Financing Addendum. It is important to note that most timelines expire at the end of the day (many contracts say 11:59PM), but not all of them do – the option period expires at 5PM (local time to the property).

So what happens if time is of the essence and you fail to comply? The consequences vary – turn to your contracts or associated addenda for answers to those questions as they are often laid out within the contract (for instance, if Paragraph 6.C.(1) is used to obtain a survey and T-47 and they are not delivered in the prescribed time, the buyer has the right to order a new one at the seller’s expense). If the answers are not laid out clearly, then you should seek the advice of an attorney before proceeding so that you fully understand the consequences and legal ramifications of your failure to perform per the contract.

Your best bet is to be aware of the timelines and make sure that anything required of you while under contract is done in a timely fashion and falls within the allotted time frame. If more time is needed, make your agent aware of this fact as it may be possible to extend the timeline for some things, but it will take the agreement of the other party.

image courtesy of Alex Lehner