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Personal Note from AIG:
Ok, if you’ve been around the industry very long then you may recognize this document, as it’s very similar to a document Joe Kaiser came up with. So kudos to Joe. This is my own “tweaked” version of it containing a few changes of my own.
The bottom line is, I think you should have any individual seller you ever buy a house from sign this agreement. What’s more, I think you should personally read it to them, out loud, and have them painstakingly initial every single line where the blanks are. Yes it feels ridiculous. But yes, I do it. And it could save your skin.
It’s amazing how the story in the seller’s mind can (and often does) change once they get past the weight of their circumstances (whatever it is that’s making them so motivated to sell) and then realize how much profit you made off their house. Oh sure, it seemed more than fair at the time. You were their savior as long as you were taking that monkey off their back – go ahead, make your money! But it feels a little different (sometimes) once a little more time passes.
Going to the pains of reading this document to them (aloud) and making them initial every single line makes it crystal clear what your intentions are. Not only will they have no way of getting away with crazy lapses of memory or similar shenanigans, but remembering (and having their own copy) of this little piece of work should be enough to keep them from even THINKING pulling anything funny.
The bottom line: Use it.
One thing: You won’t get banks, lenders or any other kind of “institutional” seller to sign this, nor should you try. This is just for the “mom and pop” sellers. They’re the ones you gotta watch.
Another thing: Notice the last term (in blue). Clearly if you’re not a licensed agent in your state, you’ll want to pull that one out of there.