Remember walking up to the counter to rent a car while you are on vacation?
You know that before they hand you the keys and walk you out to the lot to inspect the car you'll be driving around in for the weekend, the clerk behind the desk presents you with a multiple page small print contract.
"Please initial here, here, and here. Sign and date on the bottom
right hand corner on Page 3. We need 5 initials on this page and
make sure you put a check mark in this box. By the way are you
waiving the waiver or do you want the supplementary insurance?"
You're longing to get on your way to the beach, the mountains, the hotel, dinner, or the family reunion. Not to mention, there's an anxious line of would be car renters waiting in line behind you growling and giving you the evil eye as you try to parse through the fine print of the car rental contract.
Ah, forget it, as you sign the documents, not even knowing what your rights are, or what will happen should you get a dent on the bumper or forget to fill up the tank before returning the car.
MORE PEOPLE GET INTO MORE TROUBLE BECAUSE THEY DON'T READ THE CONTRACTS THAT THEY SIGN!
Okay, let's talk real estate in Northern Virginia.
Back in the day, you could buy land or a home with a handshake. Sure, you still can -- it's just not enforceable. Contracts for the sale of real property must be in writing to be enforceable. So, nobody buys a house based on a gentleman's agreement anymore.
A few years ago, the entire sales contract in Virginia was about 8 pages. Today it is a minimum of 18 pages. Add on a home inspection contingency, other contingencies, lead based paint disclosure forms, etc. and you're well up into the twenties. Buying a home on your own without the counsel of an experienced REALTOR? Good luck.
My real estate law mentor Beau Brincefield has a favorite phrase, and I quote verbatim:
"READ THE FREAKING CONTRACT"
"READ THE FREAKING CONTRACT"
"READ THE FREAKING CONTRACT"
Did you hear that? This is sound advice for buyers, sellers, and real estate agents alike. The basis for any real estate transaction is the contract. Any dispute that ends up in court will hinge upon the language in the contract. The rights of buyers and sellers are specifically set out in the real estate contract. Sign and deliver it without reading it first at your own peril!
My philosophy has always been that the first time you see the contract should not be when you are signing it. At that late stage of the game, emotions are already in play. You want the house. You want the sale. Just give me the papers and let me sign. Whoa Nellie!
When I meet with clients for the first time, I present them a blank copy of the Regional Sale Contract -- our sales contract for Northern Virginia real estate. We spend some time going over the major provisions of the document. As one of the key protections for buyers and important duties for sellers, I always read out loud and in full, Paragraph 7 (Learn more about Mighty Paragaph 7 of the Sales Contract) We discuss various important clauses like the appraisal contingency, pro rata adjustments, disclosures, default provisions, and more.
I know that buyers are anxious to move on and find out what homes are available in their price range. Sellers want to know how much their home is worth. These answers will be delayed momentarily while we review the contract. I want people to see it, way before they have to sign it.
Every single one of my clients has thanked me for this.
You will too.
If an agent won't, can't, doesn't want to, or is unable to review the Regional Sales Contract with you, or unable to answer questions about specific provisions, it's time to run, not walk, the other way. The contract is the basis of your purchase or sale and you need someone who can guide you through the dense contractual legal language and help you understand exactly what you are getting into.
Ready to buy or sell? Contact me for an appointment at 703-626-0715 or online.
I'll never ask you to sign something that you don't understand.
Brian Block is proud to serve the Northern Virginia real estate market. View his website for the latest listings and homes for sale in Northern Virginia and search all active homes.
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Brian. That is so true. Read everything before you sign. Get there early. Take time to read. Then sign. Thanks for the post, Keith..
Excellent post Brian! And I thought our purchase agreement was lengthy...having doubled from 3 to 6 pages. But 18 pages...Yikes! There are so many issues in a real estate transaction, it's amazing that people think this is just about filling in blanks. Nothing could be further from the truth.
Ours too is a lengthy one....12 pages standard....4 - 8 addendums...and my...by time I'm done going through the contract a couple hours have passed. This is great advice Brian.
Excellent advise and I think it is well worth the thought of doing it myself with a new client.
Brian, two of the problems with reading the contract are not many can understand it and secondly they deliver it too late to have time to read it.
Brian, from my point of view, I believe it is my realtor's responsibility to review the contract and what it means with respect to me. We do not have Lawyers in Calif, just escrow officers/title agents at close. Who else does the purchaser have to rely on? AJ
Brian, so very true....you try and get them to read the contract...they say, well ive bought & sold many homes in the past, I know what you are talking about!
Brian -- I provide a sample copy to my buyers and ask them to read it over at their leisure.
Many times we give them the contract blank to review so they can get familiar with it. But, we always read it upon signing, or I should say abbreviate it. If they have bought and sold before we don't have to be as detailed but it is prudent to go over it and make sure they understand it.
Brian, one of the best pieces of advice my broker gave me was read the contract and you'll be ahead of 90% of the agents out there! Like Aziz, I also provide a blank copy of every document we will be signing at a later date.
KEITH: Thanks for your comments. I can never stress enough how important it is to understand the documents you are signing.
LOLA: While there are lots of blanks to fill in, I remind everyone that the contract is not just boilerplate terms. There are very important provisions within those pages that both buyers and sellers need to understand and be aware of upfront.
SALLY: Thanks for your comments. It seems that the contract keeps getting larger. It never gets smaller. More and more addenda. That's what happens when you allow a bunch of lawyers to write these things (I can say that.)
CHRIS: Thanks for your comment. I think that there are plenty of agents out there who never explain the contract to their clients and just say "Here, sign this." Horrors!
GARY: That's why I spend at least 20-45 minutes right upfront going through a blank copy of a contract with my clients when we first start working together. That way they are already familiarized with it by the time an actual contract comes along.
AJ: Thanks for your comments with which I obviously agree.
JEREMY: I tell people that even if they have bought and sold homes 5 times in the past 15 years, the contract is constantly changing -- new provisions, new addenda, etc. I review the contract with anyone because I don't want them to be surprised or to accuse me of not telling them something that I should have mentioned.
AZIZ: I do that too, but I also review the salient points of the contract with them at our first meeting.
MISSY: Making sure that they understand it is key. One of our most important roles is answering the many questions that always arise.
DEBBIE: That is very true, though the number is probably more like 98%!
This is excellent advice, and I give it to prospective homebuyers, as well. However, it's clear to me when we actually prepare the contract, that they have not taken it out of the folder since I gave it to them - no matter how much I emphasize its importance.
Good advice, Brian, but tell us how to get them to read it!
Brian, I think there are an awful lot of agents out there who have never read the contract! Most of my buyers are attorneys, and they usually don't read the contract. But they do tend to read the boilerplate deed of trust they sign at closing!
Brian, this is so true and so important. I love your analogy since I just rented a car while in CA visiting family. I try to go through the contracts line by line with every client.
Brian, that is what the broker/owner of our company has repeatedly told us...it is now embedded in my brain to "read the contract...what does the contract say?" Great reminder.
MARGARET: Thanks for your comment. I'm not sure how to make sure that they read every word, but I do spend some time going over the major provisions with them. I tell them to read the whole thing on their own and ask me any questions. Usually if my clients are attorneys (many in the D.C. area as you know) they will read and want to make changes.
PAT: If people had to read through all the documents at settlement, closings would take an entire day!
DIANE: Thanks for your comment. Does anybody ever really read those rental car contracts. I tried once but finally gave up. Glad to hear that you review the contract line by line -- so important.
NATHAN: Good advice. As an attorney, when people call up for legal advice on a contract, whether real estate or otherwise, I always tell/told them that I could not give advice without first seeing the contract which establishes each parties rights, duties, and obligations.