Berks County Property Status; More Than Active
There is more than active to Berks County property status than you may be aware of. Following is a detailed explanation.
Many home shoppers venture online to seek a new residence. Websites bombard them with real estate information like never before, and they absorb it readily. The question is; are they getting the accurate information they need to make informed decisions? The website says the home is active, but when one reaches out to a live person to inquire they are told the home is pending. It is possible it has something to do with the different property status categories that exist throughout the multi-list services and Realtor® associations but not home search sites?
My hope is that this article helps people, customers and agents alike, understand the different types of property status that exist here in Berks County, PA, and the Trend Multi-list system. We will see how MLS property status information may differ from what's displayed on real estate portals and how it can affect you.
Let's start with the plain old Berks County Property Status Active: This is defined as Properties currently subject to a listing contract and reported to the TREND MLS in which the Participant has been directed by the Seller to set appointments for showings, AND seek agreements of sale to present to the Seller. This status is also known as For Sale, Available and on the Market, simple! This is the one where you make the call on an active property on the internet, and you're told it is available. This is where simple takes a vacation as it relates to the active status.
Next up is Berks County Property StatusActive-A: This is the Attorney review contingency indicator. It means a property is subject to a statutory three-day right of attorney review. Attorney review is mandatory in states like New Jersey. The active-A status is somewhat reflective of what I call an "any or no reason voidable right" This is a contractual condition where either the buyer and seller have a right to cancel the agreement for any reason at all. Maybe the seller wants three days for attorney review after the purchaser has had their 3-day review of the documents. The property is under contract (pending) but still available to be seen by prospective buyers.
Next, we have Berks County Property StatusActive-E: Also known as an escape clause. The question is, who can escape? It Grants the Seller the right to terminate the agreement of sale without first giving the Buyer an opportunity to prevent the Seller from doing so. Active-E formally reads as follows:
Buyer acknowledges that Seller has the right to continue to offer Seller's Property for sale to other prospective buyers. Seller's right to market the Property and accept another Agreement of Sale will cease upon Seller's written approval of the terms and conditions of an Agreement of Sale for Buyer's Property.
If during the period Seller has the right to continue to offer Seller's Property for sale to other prospective buyers, in the event Seller accepts an Agreement of Sale for Seller's Property from another buyer, this Agreement is thereby terminated.
Seller will immediately notify Buyer in writing of the termination, and deposit monies paid on account of the purchase price will be returned to Buyer."
The original agreement of sale, which includes the above language, grants the seller the right to cancel it by the act of accepting an agreement of sale from another buyer. During the period when the buyer cannot obstruct the seller from exercising this right, the property may be represented in TREND as Active-E as long as it is available for showings.
Active-E status may not show up on real estate websites. There a few real estate web portals that do list the status as "Active-Contract" under this condition. A home under Active-E-status is purchasable. The reason it is listed as Active-E is to inform other agents so they can disclose the fact that an agreement exists on the property. This condition is consistent with all the active-(Something) property statuses.
Thirdly, we take a look at the Berks County Property Status Active-F: This property status is very similar to Active-E except for one major item. Active-F allows a period of time, contractually negotiated between the buyer and seller, where the buyer has a chance to remove the contingencies that caused the property to be in the Active-F status, to begin with. This is customarily known as a 24, 48 or 72-hour kick-out clause. Truth be told, it can be any length of time, long or short, as long as it has been agreed to by the parties. If the buyer cannot remove the conditions then the seller can, if desired, move forward with another offer.
Active-F is a bit of an uncertain status in my opinion. It is a bit of both the Active-A and Active-F with the rescission period floating to a time that is most critical to a seller and another buyer. In other words, the second buyer has to craft an agreement of sale, sign it and deliver it to the seller. In other words, the second offer has to be bona fide. The terms and conditions of which have to be acceptable to the seller. It is only now that the seller notifies the first buyer of the new agreement they received, and the clock starts ticking.
The next status may be the most misunderstood of them all, Berks County Property Status Active-O: This is yet another hybrid of the active family of property status. This is the status condition that has many a real estate agent calling my office to get its meaning. First of all the active-O status means that there is a fully executed agreement of sale between a buyer and seller.
Now, this is the important part... The Seller has instructed the listing broker to continue to market the property and make it available for showings, AND Seller is accepting offers, AND the Agreement of sale does not currently contain a provision granting the seller the right to terminate or initiate the termination of the agreement of sale, AND the Listing Broker and Agent is confirming to other TREND Participants and Subscribers that the Seller is aware and has affirmed the willingness to assume the risks and consequences associated with terminating the agreement of sale to accept other offers.
I find the following statement set forth by the Pennsylvania Association of Realtors (PAR) problematic, but here it is: A mortgage and home inspection are not contingency indicators in TREND. These two activities are formalities in the sale process and most usually lead directly to settlement. Therefore, listings with these contingencies, which typically can no longer be shown, are Pending unless the Seller, Listing Broker, and Listing Agent have agreed to the terms described above.
The previous paragraph, submitted by PAR, states that a mortgage and home inspection are formalities in the process of purchasing a home. PAR is terribly liberal with what they feel is a formality. On the other hand, they have stated that a radon inspection is not a formality. I guess it matters where you live as to what a formality is. It is my opinion that this paragraph is redundant to the negative and causes more to confuse the real estate agents than help. The seller is obviously aware of the legal ramifications of their decision, and that is why the property is listed as active-O in the first place. The seller does not care what the property and contract is or is not contingent upon, formalities aside.
Active-O is likely one of those property statuses where the websites will say the home is available or active and the person on the other end of the phone will tell you they will get back to you. In the interim, they are calling my office and asking what it means.
I am somewhat endeared to the practice of listing homes with contracts as active-O. The practice of using this status can reduce property stigmatization. While the home is under contract, there may be conditions like home inspections and mortgage contingencies that exist. These conditions may allow the buyer to walk right out of the transaction. The seller now has no buyer and, in many cases, has lost valuable marketing time. One of the incidents I am aware of is how people perceive homes that were pending sale or under contract as stated online and are now back to active status. Many believe that there was something wrong with the home and that the buyer backed out because of it. On the other hand, if the home never is displayed as pending on the websites and just active most people either are not aware of the previous botched sale or believe it was the buyer who did not qualify to purchase the home.
So there you have it. There is much to Berks County property status than the simple active emblem. It is important to know what you are doing in this real estate market or hire someone who does. I am waiting:)
Knowledge is Power!
Jeffrey C. Hogue