Hello and Happy New Year, Loyal Readers! I hope everyone had a wonderful Holiday season and is finding a way to enjoy this winter season, and not just endure it! The 2020 market has already started busier for Tim Nelson – Chippewa Valley Real Estate Professional than 2018 or 2019 did, which is a good thing. One of the biggest changes to the Wisconsin Real Estate scenery this year is the new WB-11 Residential Offer to Purchase that is now mandatory for all residential home purchases! For many folks this may look pretty similar to the previous WB-11, but there are many important differences that are worth exploring! For example – the form is now ten pages instead of nine, so the complexity of the document didn’t go down. In this blog post I will elaborate on the most important and interesting updates to the WB-11 – saddle up!
Change number 1: A hard closing date. The previous WB-11 (From 2011-2019) essentially stated a “No Later Than Closing Date”. The new WB-11 takes the confusion out of it – Home will close on XX Date. This can be amended at any time, but does add a level of certainty to when closing will occur.
Change number 2: The Radon Testing Contingency. Radon test contingencies have become more and more prevalent in the last few years and for good reason. Radon levels of over 4 pCi/L are occuring in as high as 40% of homes. This used to be on Addendum A only, but is now on the offer right under the Inspection Contingency. Both of these inspection contingencies have been moved to page four and five of the offer whereas the inspection contingency used to be on page nine.
Change number 3: Satisfaction of Financing Commitment Contingency. While this is not the only change from the financing contingency sections, this lays out in clear detail how to satisfy the Financing Commitment Contingency. A loan commitment must be delivered by the Buyer to the Seller on or before the date specified in the offer. This commitment must be signed by the Buyer or it can be authorized if the Buyer gives separate written directions for delivery. This is as simple as the Buyer signing a letter from their lending institution stating that they have been approved for their loan. Obviously, your Realtor and Mortgage Lender will help you complete this correctly.
Change number 4: There is now a Seller Financing Section. Nothing complicated here, but if the Buyer would like to give the Seller the option to finance the property themselves, this box needs to be checked.
Change number 5: The right for a Seller to cure an appraisal. This section is quite handy. If a home does not appraise for the purchase price, and the Buyer gives the Seller the right to cure, then the Seller can opt to lower the purchase price to the appraised value and continue with the transaction.
Change number 6: The Closing of Buyer’s Property Contingency. This has been separated from the Bump Clause section and deals strictly with the closing of the Buyer’s property. This would come into play if the Buyer already has an accepted offer on their current home and are simply waiting for it to close prior to purchasing the home they have offered on.
Change number 7: The Expanded Bump Clause section. This section describes the exact options the Buyer does and does not have if the Seller accepts a Bona Fide secondary offer. This will come into play if the Buyer has a “Bump Offer” and needs to sell their home in order to purchase the home they have offered on. In my eyes, the major difference between the Bump Clause Contingency and the Closing of Buyer’s Property Contingency is that typically with a Closing of Buyer’s Property Contingency, the Buyer already has an accepted offer on their home and is very confident that it will close.
Change number 8: No Rental Winterization section. The section regarding Rental Winterization has been completely removed as it is no longer required by the State of Wisconsin.
Change number 9: Foreign Investment in Real Property Tax Act. This deals with the rare case (rare in the Chippewa Valley at least) that a Seller is a foreign citizen. With the new offer, the Seller, will need to disclose if they are or are not a foreign citizen. There is a certification form that Realtors have access to that Sellers can sign, certifying that they are non-foreign citizens. Easy-Peasy!
Change number 10: Less room for “Additional Contingencies and Provisions”. This is the only thing I dislike about the new WB-11. In the previous version there were two blank sections for writing in additional contingencies, now there is only one. This may require you to use a blank attachment to your offer if you have many additional provisions.
As I see it today, those are the most meaningful changes from the old offer to the new one. There are many other small changes and formatting differences, but I believe I covered the bulk of it! It is now mandatory to use the new offer, so in my Buyer Consultations, I have been going over not only the most important sections of the offer, but also the new changes, so Buyers are informed and comfortable. If you have any questions about the new WB-11, please feel free to reach out to me! And, if you are looking to purchase a home in 2020, I am ready to help you make your Real Estate dreams come to life!
~ Tim Nelson | RE/MAX Affiliates | firstname.lastname@example.org | 715-529-0239