The five most common mistakes I see agents make when preparing the RPA
By Barry Pilger
When I teach a zipForm 6 or RPA class, the first thing I ask the class is “have any of you sat down and read the RPA from top to bottom?” In the many classes I have taught, fewer than half a dozen agents, total, raised their hands. For starters, it’s a great idea. It can be done, thoughtfully, in about a half hour with time for note taking and sips of coffee. So the Mistake #5 is agents not ever having read the entire document. It’s a brilliant piece of work that deserves to be read and understood, not simply used with a checklist.
Mistake #4: Right there on page one is one of the best consumer protection provisions in the RPA. In practice, I see it completed by agents less than 10% of the time. It’s section D.1. All an agent has to do to protect his or her buyer from interest rate spikes is complete two fields: one for interest rate and one for points. For those of us who have been around long enough to remember mortgage rates spiking a full 1% overnight it’s a no brainer. For those of you who don’t recall that type of volatility, please be advised you are providing no protection for your buyers by leaving this section blank.
Mistake #3: Believing that by putting “0” or “n/a” in the first blank in section 14.B.1, the buyer is removing the property approval/inspections/reports contingency. I see this frequently. All contingencies must be removed in writing. Best way to do that is to use form CR. It can also be done using an addendum. But it must be in writing.
Mistake #2: Continued use of form WHSD when a TDS is required for the transaction. The TDS now contains the water heater and smoke detector disclosure statements. You’re just wasting time continuing to use for WHSD in most of your residential transactions. (A TDS is not required, for example, in most sales conducted by a trustee or probate administrator. In this case the WHSD is appropriate.)
Finally, Mistake #1 is one I see the most often. Listing agent furnishes the seller with the E-Pubs form Signature Page 2 which acknowledges the four disclosure booklets and which contains the words “To Whom It May Concern: I have received a copy of the Environmental Hazards and Earthquake Safety (with
gas shut-off valve update) which includes the Federal Lead booklet and Toxic Mold Update, and Home Energy Rating booklet”. Buyer signs the form, routinely, as do sellers and both agents. But the listing agent does not actually furnish copies of the disclosure booklets. I recently represented a buyer and was pleased to see a one page document in the seller’s disclosure package that provided web addresses for the publications and had the buyer acknowledge that he could access the information online.
Of the five, not all are risk management issues, but they most certainly involve what I believe to be best practices. Often they come down to the same thing.
(Barry Pilger is an Oakland-based Realtor and long-time member of OBAR. He and his wife, OBAR member Catherine Moss are owners of Stafford Real Estate with offices in the Jack London District. He has been certified to teach the RPA and zipForm6 by CAR.)