Consumer Friendly Contracts
It seems like the purchase and sales contract sanctioned by our state’s real estate commission changes every year. The 2009 contract has one change that agents should pay extra attention to.
In most contracts, buyers have three options to get out of the contract:
- Financial Contingency - If buyer is unable to get financing to purchase the house (no loan because of credit, debt to income, or other issues), clearly the contract is voided because it’s not enforceable without the funds to buy.
- Appraisal Contingency - If the home is worth less than the contract price, the lender is highly unlikely to provide funding for a home in excess of the actual value.
- Inspection Contingency - The buyer will want to have the home professional inspected to insure against a major malfunction or problem.
It’s in this inspection contingency that a major change has been made to our state contracts. Previously a line was provided for the buyer and seller to negotiate how much money could be spent on potential repairs should problems be identified. The amount line is now absent which means that unless the seller’s agent thinks to add a limit, the buyer could ask for *all* repairs no matter the cost.
Having an amount is also a tool for an agent to review what repairs a seller could be expected to make, while also confirming that cosmetic concerns are not considered a part of the repair costs. However when no amount is specified, it does open up the negotiation process for both the buyer and seller. In this case, it’s urgently important for agents to have experience in making the contract work for whichever client they represent.
Photo by Jeff Crist via Flickr Creative Commons.
