Understanding Contract Terms is Essential to a Smooth Transaction

This was posted last summer here on the blog...

It is imperative that both parties to any contract understand the terms and requirements to close. Most problems that arise in real estate transactions are misunderstandings between the parties. One person thought the seller would move out on this date or that time but the seller thought they had till such time, and so on.

Real estate agents are not attorneys! We fill in the blanks on standardized forms prepared by attorneys and approved by the state of Washington. This is designed to alleviate many problems that can happen during a real estate transaction. It is critical that all parties understand timing, dates and expectations. Many people make assumptions about how things are supposed to go. There are many standard timing issues that act as a default. For example, in Washington State, a buyer has the right of occupancy at 9pm on the day the county records the transaction. Unless specifically agreed in writing this is a contractual requirement. Many buyers think they can move in right after they sign documents or when the bank funds the loan. This can cause problems.

The moral of this tale is that both buyers and sellers need to be certain they understand the terms and conditions to the purchases and sale agreement. They should never feel afraid to ask their real estate agent questions about the details and procedures that are mandated and/or customary practices when closing a real estate transaction. Real estate agents should always be clear and concise about these terms and conditions and be certain that their client understands them. If language is a barrier then that agent needs to work harder to ensure that the clients understand.

When all parties understand the details and procedures to close, the transaction will go smoothly and everybody wins.

The Strongest Offer Isn't Always the Highest Offer

Sometimes a seller is faced with the desirable dilemma of having multiple offers on their home. Initially the tendency is to think the highest offer is the best. Generally that would be true, but not always. If the seller is trying to move to a new house they are purchasing they have to think about the big picture. If the sale fails, then that could cost them money on the house they are moving into or even cause that sale to fail. Sometimes the best offer is the one with the least obstructions. That all cash offer with a five day inspection period and two week close might work better for the seller than a USDA financed offer with a ten day inspection and a 60 day close that's $5,000 higher and right up against the buyer's maximum approval.

Usually the highest offer is the one the seller takes but there are times when a "cleaner" offer that is a little less money is the better route for the seller. In this seller's market, buyers should try to structure their offer to suit the seller's needs. The buyer's agent is well advised to talk to the seller's agent a try to figure out what the seller is looking for in an offer. Not so much the dollar amount but the terms. Sometimes sellers have a natural inclination to refuse to pay closing costs for a buyer. Even though an offer can be structured to net the seller the same amount he wants, some sellers have illogical or emotional reasons for not taking a particular offer that is otherwise very strong. In a multiple offer scenario the buyer may not get a second chance to present the best offer possible or to modify terms to suit the seller's idiosyncrasies.

In this fast selling market buyers need to be thoughtful about their approach to an offer.