Real Estate Contracts: Critical Early Mistakes to Avoid
If you have bought or sold a home, you’ve signed a contract. Unfortunately, it is only after signing that your attorney gets a look at it. It is an illogical system because parties can make irreversible errors before hey even call my office. I can prevent more mistakes than I can fix; if you agree to bad terms, there are only so many ways to negotiate improvements.
As Benjamin Franklin wrote, “An ounce of prevention is worth a pound of cure.” In that spirit, let’s review two relatively common mistakes – one that Buyers make, and one that Sellers make – and how to avoid them. (There are several standard contracts used in Chicagoland; the most common is the Multi-Board Residential Real Estate Contract 8.0, which is what I use and discuss here.)
Buyer Thoughtlessly Waives Inspection or Repair Requests
The Multi-Board 8.0 has three options regarding inspections and requests for repairs (or credits toward repairs): (1) Waive Inspection, (2) Inspection, No Requests, and (3) Inspection, With Requests. This is an important provision that sellers consider when deciding which offer to accept, so they do not agree to change it afterward. That means if you are a buyer, never waive inspection – it is always worth the cost to avoid buying a house with expensive problems.
If you want to make your offer more enticing, choose Inspection, No Requests. This allows you to back out of the contract if there are a large number of expensive repairs. However, that also means you cannot make requests for repairs without violating the contract – and the Seller could cancel and move on.
Buying a home can be nerve-wracking – but don’t pressure yourself into accepting a large repair bill so you don’t lose “this” home! There is another just around the proverbial corner. Therefore, my recommendation, in general, is to choose Inspection, With Requests, and let your attorney negotiate for any repairs needed.
Seller Agrees to Closing Date Too Far Out
The final closing date is almost never the one agreed to in the contract – it’s more of a guideline for how fast the transaction should proceed. While I can easily push back a too-early closing date, it is much harder to move up a later closing date because there are a number of deadlines tied to it.
If you agree to a long closing date, you risk the Buyer backing out after weeks or even months. Then you’re back at square one with a potentially worse real estate market, other offers unavailable, and more property taxes to pay. It can be costly, stressful, and throw a wrench in your plans – especially if you planned to use the proceeds to buy a different home. My recommendation: pick a date about one month out and expect to actually close in six weeks.
Buying or selling a home? Need a will or trust? Want help with your taxes? Contact Strzalka Law Office at 773-631-9215 or StrzalkaLaw@MASLawOffice.com.
