How many times have you submitted an offer to a listing agent and the price, and closing date are acceptable to the seller, but the agent has narrowed your inspection period to 5 days and your financing period to 10, not to mention inserted a “ AS IS “ addendum on a house that is brand new and flawless. This phenomenon among agents has become popular over the last 5-6 years.
In the early 90's when I was attempting to sell commercial real estate and I write attempting I had an excellent and probably one of the more talented and better known commercial experts in South Florida, Frank Arata Jr. as a mentor. Frank always told me and it made sense to me then, and still does now “Don't negotiate what doesn't strengthen your position in the negotiation and move you forward.” When I look back to the good old days, Realtors only on occasion made change to these clauses, but then again that was when Realtors understood the goal was to sell and close the deal. Remember the legal minds that put these contracts together with all the default dates have many years of experience and collective input into the purchase and sale agreement we use. So let’s look at these areas commonly changed by some less informed practitioners and how they actually begin to negotiate against themselves and their unfortunate customers who hire them.
Financing Clause: How many times do you see this one, where the listing, or maybe even the buyer’s agent is trying to impress someone with their knowledge of contracts reduces the financing commitment period from the normal 30 days on a 45 to 60 day closing to 10 or 15 days. When the listing agent has made this change what happens here is the selling agent says to the buyer no big deal, just sign it because we'll just get an extension. Then three days before the commitment is required the listing agent begins to pull their hair out and attempts to get all involved to jump through hoops to get an extension on the financing commitment (you can spot these Realtors they are the one’s without hair and sweaty palms) they don't terminate the contract because they don’t want to loose the deal, well they should not have changed what wiser people put as a default date and you know what, they’d have more hair. Be smart, make your life easy, keep your blood pressure low and enjoy the business and leave it alone. Trust me the attorneys who wrote it really do have a little more brains than we like to give them credit for.
Inspection Period: Guys give me a break 10 days is a very reasonable time for inspections to be completed and or the life of me I cannot see what a Realtors think they gain by changing this date. Look guys there are exceptions to everything, but before just changing an otherwise perfectly acceptable contract, make sure it really betters your position in the negotiation
Limitations on the Inspection: This one is really crazy on a perfectly immaculate and flawless house the listing agent will lower the limit from the 1.5% to 0 or 1. Why? By the sellers admission there is nothing wrong. On a $400K purchase 1.5% = $6K by you lowering it to 1% it now = 4K when there is not even $500.00 dollars in defect, you are negotiating against yourself. It is simple if it isn’t broke you don’t to negotiate it.
We're supposed to be expert negotiators, let's begin by understanding the contracts, and making sure that the ball is going in the right direction so we don’t score against our own team.
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