If All Else Fails - Read the Contract!
Posted: 1:43 AM, Jan. 15, 2007
Posted: 1:43 AM, Jan. 15, 2007
What Does the Sales Contract Say?
Over the years, I’ve seen many situations where an Agent recognizes that a transaction is starting to go off the tracks. Their Broker is likely to get a frantic call for help and the question, “What do I do now”? Typically the Agent has a transaction in escrow, and some incident occurs that puts the closing in jeopardy. My answer to the Agent would more than likely be in the form of another question, i.e. “What does the contract say”? The contract itself, in almost every instance, holds the answer to the Agent’s question.
Often the answer to the Agent’s question is in a paragraph that does not have a “check mark” beside it – a paragraph commonly called a “boiler plate” provision of the contract. There is a tendency by some not to read those paragraphs and/or not to address them with their clients. These typically are the same Agents who tell their clients – as they progress through the multiple pages of the contract - to simply “initial here and sign here” and it is only after the deal starts to go south that anyone pays any attention to those “boiler plate” provisions.
Another concern is the Agent who simply places numbers in the “fill in the blank” type of paragraphs without regard for the consequences of what those numbers actually represent. For example, if you enter “45 Days” in a contract as the time period before closing, consider carefully what the actual closing date will be. Look at the calendar and see what day of the week the closing is scheduled. Is it on a holiday when the Escrow Company may be closed? Is it more advantageous for your client to have closing on a Friday, or a Monday? At the end of the month or the beginning of the month? How will it affect their mortgage payment? When you just fill numbers in blanks without thought for the actual circumstances involved, you could have very unhappy clients on your hands, especially if you’ve cost them money by not paying attention.
Sometimes an Agent fails to comprehend that the entire contract does, in fact, tie together and is not just page after page of totally unrelated information. The impact of every single paragraph has to be gone over with every client. Not just when something hits the fan; but in every circumstance prior to the client signing the contract.
Another dangerous tendency I have seen over the past twenty-five years is that, when deals start to go south, some Agents typically try to place the blame on the other client or on the other Agent. The rationale appears to be for the Agent to get their client convinced that the problem always lies with the other party, i.e., the other party is being unreasonable, stupid, greedy, unethical, etc.
I have never found this tactic to be anything but totally destructive. Rather than trying to work their way though the dilemma by seeking solutions, the Agent just adds fuel to the fire by doing this, and compounds the existing problem. Suddenly, the client is unsure why you, as their Agent are being so negative about another Agent. They may wonder, “Is the other Agent really that bad, or are you trying to make yourself look better at the other Agent’s expense?” When you take the high road and stay professional, everybody wins. When you take the low road – everyone looks bad.
Buying and selling real estate can be a very emotional experience and it is up to the Agent to try to keep everyone’s emotions in check – both the client’s and the Agent’s. This is especially true, but not limited to, when both clients are in the same office. Once emotion and/or greed take over, (or if the Seller happens to be a bank in a foreclosure situation), logic does not govern the situation. Logic and law are not always the same, and Realtors are, in almost all cases, dealing with Contract Law, not a course in Logic!
Comments to an upset client such as “I understand how you feel, but it may be helpful to look at the situation from the other party’s point of view….” will usually be more constructive than demeaning to the other party, and prevents fueling the hostility. A change of perspective can sometimes put an entirely different light on a client’s thought process, and could work towards finding some middle ground to operate from.
However, when all else fails, fall back on, “What does the contract say”? You may be surprised how many problems and questions can be resolved simply by a careful and thorough re-reading of what the contract says, and what the parties involved have already agreed, in writing, to do. Most of the time, pointing out what’s already there resolves the issue for everyone, with a minimum of conflict.
IT’S A DETAIL BUSINESS!
I know everyone's heard the old saying, “The Devil is in the Details!” As mentioned above, it’s a little late to read and comprehend the contract after a deal starts to come apart. Here’s a tip that I’ve found to be invaluable once the transaction is in escrow: Thoroughly go through the contract, line-by-line, highlighting each and every contract provision requiring action of some kind. Highlight with one color all of the items that are your responsibility, and use another color for the items that are the other Agent’s responsibility. This will help keep you on track for the things you need to do, but will also remind you to keep a sharp eye out to make sure that the other Agent is fulfilling their contractual responsibilities. As you know, accomplishment of all contract items is crucial to the successful conclusion of the transaction. There may be times when the other party would like to kill the deal, and may be hoping that you will fail to hold them to a contract provision, thereby enabling them to cancel the transaction. Don’t let it happen on your watch.
I hope you’ve found this information helpful! Until next time – Take Good Care!
Jay J. Spadinger, REALTOR, BIC, ABR
Hawaii State Educator
Rainbow Properties
Akahi Real Estate Network, LLC
www.rainbowproperties.com
www.jayhawaii.com
Comments (0) | Add Comment
View more entries tagged with: Contracts
Over the years, I’ve seen many situations where an Agent recognizes that a transaction is starting to go off the tracks. Their Broker is likely to get a frantic call for help and the question, “What do I do now”? Typically the Agent has a transaction in escrow, and some incident occurs that puts the closing in jeopardy. My answer to the Agent would more than likely be in the form of another question, i.e. “What does the contract say”? The contract itself, in almost every instance, holds the answer to the Agent’s question.
Often the answer to the Agent’s question is in a paragraph that does not have a “check mark” beside it – a paragraph commonly called a “boiler plate” provision of the contract. There is a tendency by some not to read those paragraphs and/or not to address them with their clients. These typically are the same Agents who tell their clients – as they progress through the multiple pages of the contract - to simply “initial here and sign here” and it is only after the deal starts to go south that anyone pays any attention to those “boiler plate” provisions.
Another concern is the Agent who simply places numbers in the “fill in the blank” type of paragraphs without regard for the consequences of what those numbers actually represent. For example, if you enter “45 Days” in a contract as the time period before closing, consider carefully what the actual closing date will be. Look at the calendar and see what day of the week the closing is scheduled. Is it on a holiday when the Escrow Company may be closed? Is it more advantageous for your client to have closing on a Friday, or a Monday? At the end of the month or the beginning of the month? How will it affect their mortgage payment? When you just fill numbers in blanks without thought for the actual circumstances involved, you could have very unhappy clients on your hands, especially if you’ve cost them money by not paying attention.
Sometimes an Agent fails to comprehend that the entire contract does, in fact, tie together and is not just page after page of totally unrelated information. The impact of every single paragraph has to be gone over with every client. Not just when something hits the fan; but in every circumstance prior to the client signing the contract.
Another dangerous tendency I have seen over the past twenty-five years is that, when deals start to go south, some Agents typically try to place the blame on the other client or on the other Agent. The rationale appears to be for the Agent to get their client convinced that the problem always lies with the other party, i.e., the other party is being unreasonable, stupid, greedy, unethical, etc.
I have never found this tactic to be anything but totally destructive. Rather than trying to work their way though the dilemma by seeking solutions, the Agent just adds fuel to the fire by doing this, and compounds the existing problem. Suddenly, the client is unsure why you, as their Agent are being so negative about another Agent. They may wonder, “Is the other Agent really that bad, or are you trying to make yourself look better at the other Agent’s expense?” When you take the high road and stay professional, everybody wins. When you take the low road – everyone looks bad.
Buying and selling real estate can be a very emotional experience and it is up to the Agent to try to keep everyone’s emotions in check – both the client’s and the Agent’s. This is especially true, but not limited to, when both clients are in the same office. Once emotion and/or greed take over, (or if the Seller happens to be a bank in a foreclosure situation), logic does not govern the situation. Logic and law are not always the same, and Realtors are, in almost all cases, dealing with Contract Law, not a course in Logic!
Comments to an upset client such as “I understand how you feel, but it may be helpful to look at the situation from the other party’s point of view….” will usually be more constructive than demeaning to the other party, and prevents fueling the hostility. A change of perspective can sometimes put an entirely different light on a client’s thought process, and could work towards finding some middle ground to operate from.
However, when all else fails, fall back on, “What does the contract say”? You may be surprised how many problems and questions can be resolved simply by a careful and thorough re-reading of what the contract says, and what the parties involved have already agreed, in writing, to do. Most of the time, pointing out what’s already there resolves the issue for everyone, with a minimum of conflict.
IT’S A DETAIL BUSINESS!
I know everyone's heard the old saying, “The Devil is in the Details!” As mentioned above, it’s a little late to read and comprehend the contract after a deal starts to come apart. Here’s a tip that I’ve found to be invaluable once the transaction is in escrow: Thoroughly go through the contract, line-by-line, highlighting each and every contract provision requiring action of some kind. Highlight with one color all of the items that are your responsibility, and use another color for the items that are the other Agent’s responsibility. This will help keep you on track for the things you need to do, but will also remind you to keep a sharp eye out to make sure that the other Agent is fulfilling their contractual responsibilities. As you know, accomplishment of all contract items is crucial to the successful conclusion of the transaction. There may be times when the other party would like to kill the deal, and may be hoping that you will fail to hold them to a contract provision, thereby enabling them to cancel the transaction. Don’t let it happen on your watch.
I hope you’ve found this information helpful! Until next time – Take Good Care!
Jay J. Spadinger, REALTOR, BIC, ABR
Hawaii State Educator
Rainbow Properties
Akahi Real Estate Network, LLC
www.rainbowproperties.com
www.jayhawaii.com
Comments (0) | Add Comment
View more entries tagged with: Contracts
