Oakes/Waters Case Study
The Offer –Buyer’s Agent, Buyers, Offer Information
Tom and Susan Oakes are excited about purchasing their first home. They have already
talked to a loan officer, Michael Miller at Best Ever Mortgage Company. He assured them
that once they were under contract, they could get credit approval in 21 days. Their ability
to purchase a home is dependent on this credit approval. He said they qualify for a FHA
203(b) loan on a house priced up to $150,000. They will make the minimum FHA down
payment and have an interest rate of 3.5%, fixed for 30 years, with only a 1% origination
fee. The upfront FHA MIP is 1.75%, which they will finance, and the annual premium is
1.25%. They will ask the seller to pay $4,000.00 of their closing costs. They are currently
living in an apartment at 2301 Housing Way, #231, Small City, TX 75999, a small town with
only one zip code. They have been there for two years. Tom (email@example.com,
cell 491-386-4576) is a teacher in the Small City School District, while Susan
(firstname.lastname@example.org, cell 491-683-6745) works for the city.
Their agent, Fred Smith (email@example.com, license #0123456, cell 491-124-
5368) of Better Houses Realty at 1289 Circle Lane in Small City (office phone 491-987-
6543, fax 491-987-6544), found them a wonderfully updated older home built in 1952,
located on an oversized lot at 3864 Wayside Drive, and owned by Howard and Elizabeth
Waters. The Oakes tell Fred that they would like to offer $145,000 for this property, with a
$2,000 earnest money deposit (no additional earnest money) and a $100.00 option fee
(applied to the purchase price at closing) for a 10-day option period. Both amounts would
be in the form of a personal check. Fred determines that the legal description for this
property is Lot 4, Block A, of the Wayland Drive Addition, Large County, TX. The Oakes
would like to close on October 28 of this year and take possession upon funding.
Fred (the buyer’s agent for Tom and Susan) suggests that the Oakes obtain title insurance
from Trusty Title Company at 1438 Broadway Avenue in Small City, and recommends that
they ask the seller to pay for their policy. Fred tells them that he will have Barney Mason
(license #0234567), his supervising broker and owner of Better Houses Realty, review the
offer before he submits it. Barney suggests that they should mediate any disputes. The
taxes should be prorated and the seller should provide proof that the HVAC has been
serviced in the last 6 months. The Oakes prefer all notices to go to their agent. Since the
house was built in 1952, Fred gives them the pamphlet Protect Your Family from Lead in
Listing Information – Listing Agent, Sellers, Property
The property is listed by Jim Sell Realty, the seller’s agent (office phone 491-165-7924, fax
491-165-7925), at 896 First Street in Small City, which is owned and operated by its
broker, Jim Sell (license #0345678). He is offering to pay the selling agent a 4%
commission on this listing.
Becky Jones (firstname.lastname@example.org, license #0567891) is the listing agent. Becky (cell
491-136-7825) suggests to the sellers, Howard (cell 491-849-2321,
email@example.com) and Elizabeth Waters (cell 491-984-2322,
firstname.lastname@example.org), that they pay for a Residential Service Contract, but not
more than $500.00. The sellers inform her that they have a survey that they are willing to
give to the buyers within three days of the effective date of the contract. If that survey is
not acceptable, the buyers will pay for a new survey.
Oakes/Waters Case Study
The sellers will retain their antique chandelier in the dining room. The sellers also tell Becky
that they have no reports or knowledge of lead-based paint, asbestos, or termites
concerning their property.
The Waters would like their attorney, Dewey Sue, at 456 Broadway Avenue
(email@example.com, 491-123-4567, fax 491-123-4568) in Small City, to review the offer
before they sign it. Howard Waters wants all notices regarding the contract to be delivered
to him personally.
Prior to writing the offer, the buyers review the Seller’s Disclosure of Property Condition and
also determine that the home is not in a POA. They decide that they will take the property
in its present condition, but they want a termite inspection and a mechanical and structural
inspection performed. Because of the age of the home, Mrs. Oakes is concerned about
asbestos and would like an inspection completed for this contaminant during the option
period, as well. The Oakes decide to waive their right to conduct a lead-based paint risk
The buyers also agree to pay the customary loan related fees and the appraisal fee and see
no need for an attorney to represent them. Mr. Oakes is an antique car buff and insists that
they will not purchase the home unless he can build a 20 ft. x 24 ft. garage at the back of
the lot. He calculates that it will take 4 days after he receives the documentation to make
The buyers tell Fred that they will take title as community property in the names of Thomas
S. Oakes and Susan L. Oakes. If the sellers accept their offer in a timely fashion, the
contract date will be September 15 of this year.
Contract Form Notes & Explanations
The FHA down payment is 3.5% of the sales price rounded up to the nearest $50.
$145,000 x 3.5% = $5,075 rounded up to $5,100.00
The buyers have made it a condition of the contract that they can get a permit to “build a
20’ x 24’ garage at the back of the lot.” This information is entered in this paragraph.
Even though the buyer is accepting the property in its present condition, the buyer still has
the right to do any required inspections and renegotiate the contract during the option
period. The termite inspection and the mechanical and structural inspection do not have to
be mentioned in the contract.
There are promulgated addenda for every item the buyers and sellers mentioned, except
the HVAC servicing, which is entered in Paragraph 11 as a factual statement.
Oakes/Waters Case Study