One aspect to the Real Estate transaction is Contract Negotiation. When a homebuyer and seller agree to a purchase price and general terms, this is laid out in writing and a Binding Contract is born. This contract was stone, and although we Realtors are not attorneys, our knowledge on drafting contracts and intrepting the language differentiates the good from the bad agents.
Fast forward to Today! Millions of active homes on the market are now Short Sales. The most attractive pricing are Short Sales and REOs. MOST AGENTS DO NOT KNOW how to structure and interpret a Short Sale Addendum.
An addendum to a contract allows for parties involved to add certain elements to a real estate deal without having to re-write the entire contract over again. Usually its a deadline extension, or a price change, etc…its not a big deal in simple terms to understand how to draft an addendum.
The Short Sale Universe has its own set of rules. THE SHORT SALE ADDENDUM is more powerful and important than the contract itself!!!
For example, in the great State of Maine, our short sale addendum has TWO major caveats, where most Buyer and Seller agents overlook and ingnore. Typically, agents just submit the entire Zip Form generated Short Sale addendum with the mindset that it’s a necessesary part of a short sale, because the Purchase Price is decided and approved by the Seller’s Bank. Right and WRONG!
There is language that allows a Buyer to back out at any time prior to receiving Short Sale consent or approval from the lien holder. When this is left intact and not redacted and negotiated out, it leaves a Short Sale seller vulnerable to the buyer getting antsy for waiting around.
HOW IS THIS THEN, A BINDING CONTRACT? There’s nothing binding about it.
Secondly, and conversely, the last paragraph entitles the Seller to continue to market the property for OTHER offers, typically the buyer agents assume this means that it allows the seller to market for BACKUP offers. This is a deadly assumption and one that again….unwinds the binding contract.
It enables the listing agent to take other offers and boot the buyer agent out the door, no matter the time frame or whether you have a “contract” or not.
We cannot practice Law as a Realtor, however, we have in our authority, the ability to know what our Realtor forms mean, and change the language in them.
I suggest we use that ability.
Make sure you and/or your agent knows this practice, as it can cost you a house. Literally.