The paperwork

C -Real Estate Contracts: Offers or contracts?

Many people feel that selling on your own must be highly complicated. Some legalese and a few obscure real estate terms works to intimidate many owners. With a basic understanding about a contract and the help of real estate specialists, it’s easier than you think. 

Contracts must be in writing:

Sales contracts (also referred to as contract of sale or a purchase agreement), must be in writing in just about any real estate transaction. Verbal agreements are next to impossible to enforce in a court.

Written contracts eliminate misunderstandings. They help ensure that both parties get what is agreed to. Included in the contract are both the terms of the offer and the acceptance. Price is the one thing that both parties focus on, but the price takes up only a portion of one line in the contract.  The rest of the document contains the vast majority of the language and details the conditions for executing the contract.

Verbal offers are common:

Surprisingly however, the initial negotiation phases for by-owners are often verbal. That’s because of the personal informality that is frequently established between buyers and sellers.

If a purchase agreement is reached, and the buyers haven’t indicated that the offer should now be put in writing, then you need to initiate this requirement. 

Buyers typically begin the process by submitting a signed written offer to purchase. And until you accept the offer, it is not a contract. As a matter of fact, before you accept it, the buyer can change any of it, including withdrawing it. This document (offer) becomes the sales contract when both parties sign it and initial all agreed upon changes.

It’s usually the buyers who present their offer on a contract form of their choosing. When they present the offer, it’s important that you are aware of the other contractual elements besides just the price. For your review, here is a list of the various contract elements. Bear in mind that in your area, the elements in a contract may use a slightly different name.

Contracts can sound intimidating:

When talking with buyers, avoid reference to a “sales contract”, as it sounds too formal. A “sales agreement” sounds friendly and much less intimidating.

Talk with the buyers about initialing the agreement, not signing the contract. Some people are nervous about putting their signature on anything. Ever notice how the experienced salesman will ask their client to put their John Hancock on an agreement? Same purpose.

Where to obtain a contract:

If listed, the agent representing the buyer will provide a contract. If selling by-owner and the buyer doesn't have one, blank contracts should have been obtained from the real estate agents who give you a CMA.

Call an escrow or title company (check the yellow pages) and most are happy to supply you with a full set of documents. They hope you will use their services to close on your home. Your attorney may already have a fill-in-the-blanks contract that you could secure in advance.

In the event the buyers don’t submit their offer in writing, you could have your attorney (or theirs) prepare a full contract, as soon as possible.
                           
If you feel the need to have something in writing and the agreement is verbal, you can quickly obtain a basic offer/contract at most office supply stores. Bear in mind that most generic contracts fail to address unique issues and contingencies. More comprehensive forms can be found online from kaktus.com, myeasyforms.com or findlegalforms.com.  Consider adding an “Attorney Review” clause (see the NEGOTIATE section) to any of these generic agreements.

It’s comforting to have either a contract that’s used by the local real estate agents, a title company or one supplied by your attorney. Reviewing it ahead of time and having an attorney lined up will give you all the confidence you’ll need.

When a written agreement is finally reached, make sure that you and the buyer both walk away with a signed copy of all documents. 

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