I've seen a lot of contracts fall apart right at the tail end of the transaction and it's usually because some small detail (that had important ramifications) was not taken care of. The "T" failed to be crossed and the "I" was missing a dot. Don't let this happen to you. Realtors, take notice.
Most real estate contracts are huge -- multiple pages with pre-printed, fine print (about 6-8 point fonts), legally-binding and costly -- but the key here is "legally binding." This is what you want. A good contract that's enforceable and locks buyers and sellers into an agreement to get the deed done. The challenge is when someone wants out and finds a loop hole left wide open by the other party and an agent who didn't get a signature or meet a deadline.
Take the Washington, D.C. regional contract. It starts out 10 pages, then it's followed up with a regional jurisdictional addendum package (either Washington, D.C., Maryland or Virginia -- which is five pages). Once the local addenda's attached there are others that make the package swell to well over 50 pages for buyers and sellers to review -- lead-based paint disclosure, property disclaimer/disclosure, inspection addenda (radon, home inspection, lead paint, etc.). There are literally dozens of forms that can be added to this contract. If you check in your local jurisdiction, it's probably not dissimilar.
Be careful in the writing of the contract to understand what it means and doesn't mean. I've seen contracts written on these same 10 pages result in varying degrees of protection (or liability) for buyers and sellers because the agent either knew or didn't know what to write in the paragraph marked "other terms," for example.
Thus when the buyer and seller come to agreement, the work's not over. Sure, you got your price of $450,000 with $10,000 in closing costs assistance and settlement in 30 days. Great. Now what? Well, if you said you would have a lender letter with full approval in 2 days, you have to actually do that. Which means the letter from the lender must appear (facsimile, delivery, email -- whatever you agreed to in the contract) within two days and the contingency removed. No letter? Oops, you may be in default.
Let's take a look at the home inspection clause for a moment. It says the home inspection will be conducted in (blank) days, and then it's followed by three more blanks to fill in more dates. (Now stay with me here as I explain the intricacies of this one contingency paragraph).
- The paragraph in essence gives the buyer a certain number of days to conduct the inspection and get the report with the buyer's defect list; then the seller has a certain number of days to respond with what s/he's going to do about the defects.
- This is followed by yet another set of days for the buyer to respond to the seller's counter; and then one more set of days for the seller to respond to the buyers response to his response. Got it?
This one paragraph could take up to two weeks to plow through before it's fulfilled. As you can see -- if the buyer or seller blink the wrong way on this "ratified" contract (meaning everyone's already agreed to abide by it as written) the deal could be over. If the seller says, "No, I'm not fixing anything," then the buyer has the option of stepping away from the contract with his deposit check and finding another house.
If the buyer really wants it, he could agree to move forward and the contract stays in force and moves toward settlement as planned. But the buyer must tell the seller he's okay with the seller not fixing the defects and that he (the buyer) intends to move forward in the transaction. All of this must be done in writing.
This is only one such paragraph in the contract that has deadlines, initials, signatures, and action steps required to finally get through to the end of the transaction. As you're rushing through to get the deal written and ratified, be sure your agent explains what you're really signing and what will happen if it goes the way you want it to go and especially what it means to you if it doesn't.
