LEGAL TALK by Phyllis Oeser

 

 

The For Sale sign is posted and I have an interested buyer — what’s next?

In our previous article, we discussed what you should do and consider prior to posting your property for sale, by realtor or by owner. In this article let’s assume you have made the decision to sell your property, you have educated yourself regarding the value and have either listed the property with a realtor or you have posted a “For Sale” sign on your property. Once there is an interested buyer, what is the next step?

When calls from potential purchasers begin, there will be other decisions to be made other than the sales price. If you have listed your property with an experienced realtor, he or she will be able to explain many of your options and decisions necessary for the preparation of a written agreement to sell your property. This written agreement is most often referred to as an “Earnest Money Contract.”

Realtors use standard forms from the Texas Real Estate Commission and this Earnest Money Contract form has various blanks to be filled in and options to be checked by the realtor. The majority of residential property is sold using one of these standard forms.

However, many times when no realtor is involved the buyer or seller obtains one of the standard Earnest Money Contract forms from a realtor friend, the internet or an office supply and fills it out. This will work as long as the parties understand the terms and correctly fill in all of the blanks. Other times the Buyer and Seller write out a simple statement and rely upon it as their earnest money contract. Other times the Buyer and Seller are content with a verbal agreement. I have seen property bought and sold by all of the foregoing; however, just because it has been done this way is in no way an endorsement of that method. All of these may work as long as there are no issues, no problems, no one changes their mind, and it is a cash transaction. However, a transaction of this nature is seldom completed without any issues or changes.

The problem with completing the standard form is agreeing to something you do not intend to agree to, or that you are unaware of. The problem with drafting your own document is you will address only the things you are aware of – therefore, your agreement will be incomplete. The problems with verbal agreements are that your memories may differ, and they are usually unenforceable.

Therefore, your next step is to enter into a written agreement referred to as an “Earnest Money Contract.” The Earnest Money Contract states the amount to be paid for the property, details regarding financing, details regarding closing cost, deadlines including date of closing and all other terms pertinent to the sale and purchase of the property.

If you have a realtor they will discuss the terms of the Earnest Money Contract and complete the contract for you. If you are not working with a realtor in an effort to avoid paying the realtor’s commission you should contact a real estate attorney to prepare and advise you regarding provisions in the Earnest Money Contract. The Earnest Money Contract is the road map for the rest of the transaction. A properly drafted Earnest Money Contract will address most issues that may arise.

This is not the time to save yourself a few dollars by drafting your own Earnest Money Contract. Think about it. Whether you are buying or selling, this is one of the biggest investments of your life. For the approximate cost of a new tv you can retain legal representation to assure the largest investment you are ever going to make or receive is done properly, or you can save those funds and go it alone.

In our next article we will discuss the details of the Earnest Money Contract.

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