Blog: R.E. Tales
(Hey, they all can't be pretty...)
A buyer is planning to come up to buy a place and wonders why I am still talking with other buyers about it. Here’s why:
Simple in concept, not so easy in practice: Any property that is for sale, remains for sale until a contract is both accepted and signed by both parties. That’s when it is off the market. Let’s say that I have had several verbal offers and various indications of great interest from several folks, but if so far no one has signed anything nor do we have the owner’s signatures. Both are needed to make a valid contract and to take it off the market. Verbal offers and the degree of your interest means little, not in a legal sense.
I try to keep folks abreast of developments if I know they are definitely interested in a property. It would be improper for me to play favorites; I have to be fair to all and to also keep the owner’s best interests in mind. Someone can always come in out of the blue and make a higher offer, higher even than the asking price, if they are so moved, and everyone else could be left suspended in space, wondering what happened. Rare, I’ll admit, but I have seen it happen – more than once. Once the Purchase Contract is signed by both parties, that person who came in out of the blue will have to wait and hope that the person who first agreed to buy a property will not be able to perform as stipulated, finally leaving it open to them. That happens too, though it is far from common.
While the price is always paramount to a seller, their conception of a buyer’s ability to perform is also extremely important. I tell sellers that I’d rather see them get a somewhat lower price from someone we know can close the deal than to get theoretically more from another party only to find out weeks later that they could not get the money. Sometimes they listen to this, sometimes they don’t. Real estate is a classic case of capitalism at work.
Because someone is intending to seal a deal does not automatically put them in first place. Suppose you came up and changed your mind at a second look? That happens. You are not obligated to buy just because you think you want to buy it, nor is the seller obligated to sell. to you. No agreements have been made. Nothing is in writing. It’s all just talk at this point. I tell sellers not to get excited over a buyer until we see two things: something green in my hand and a name on a dotted line. Then we can start to make plans.
There is another situation that bears mention. In every contract I insert an "Attorney Approval Clause". This gives the lawyers for both buyer and seller the right to object, if they do so very quickly. If one so objects, then we have three choices: to give up and look for someone else, to agree to their demands, or to negotiate further until they are satisfied. I don't have a problem with this, not in principle. What I hate is when one objects, then does nothing about it for a long period. On January 4th, we signed a contract between buyer and seller. Each really likes the other. (This is always a good sign.) Both attorneys raised objections... and then did nothing. I'd bug them periodically. Finally they got around to doing something, a completely new contract, which I'd expected. Surprising, it was really simple. Simple is good (usually). Only this time, they left a lot of stuff off that had been agreed to in the original contract, important stuff. That tells me he had only glanced at the original contract and paid it little attention.
I pointed out the differences to the buyers (I was only representing them this time) and suggested they may want to make sure their attorney recognized this (and copied their lawyer). So now we have more conversations between lawyers and an addendum is supposed to be added. It is now mid February and we still do not have a binding contract. Iit has taken 6 weeks to do what we did in an hour around the dining room table. As a listing agent, I would have been livid. There's no legal contract yet; I have to keep showing it, working on it, advertising it, spending (wasting) money and time. And suppose I find someone else?
What to do now? Do I sell it to the new folks and screw over the first buyers for something that was not their fault? But suppose the lawyers continue to diddle around forever and it never gets done. Suppose the buyers lose interest, get cold feet, or find something else they like better. Listing agents have an obligation to the seller to find a buyer, ready, willing and able to buy it. It has to be for sale until we get a valid contract in place. Lawyers do not think about these things. Or maybe they do, but don't care.
Some are merely amusing. some can help you immensely. All are interesting.
After 40 years, I've learned a lot, & acquired unforgettable experiences. Follow these long enough and you'll eventually get the whole book. (Names probably changed, for obvious reasons.)