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Understanding Contracts

The W Home Group / Uncategorized  / Understanding Contracts

Understanding Contracts

I remember in 2004 writing an offer on a house and calling the listing agent to ask them how many offers they currently had….her reply was 28 offers in total.  I knew at that moment if I wanted a career in real estate I would have to master how to write contracts.

I wanted to find competitive loop holes where my clients could make more aggressive offers with limited risk.  I started to identify the key components of an offer and analyze what aspects aside from price were actually important to the sellers.

Closing date – once a client of mine wants to make an offer, the first thing I do is ask the listing agent what is the ideal closing date for the sellers.  Do they need to find a house, do they want to close fast?  It amazes me when I represent a seller how rarely I get asked this question….don’t you think the timeframe for the seller moving out of the house would be a key variable to accepting your offer?

Escalation clause – this addendum clearly states that my buyer is willing to pay X more dollars than any other offer….an outsider could make an assumption that this is risky and showing your hand however the beauty of the escalation clause is once another offer escalates to a certain dollar amount, your buyers then have the ability to accept or walk-away.  All you are doing is seeing what you would have to pay to get your dream home…if the number escalates too high, you can simply not agree and walk away.

Walk-away clauses – the MD contracts have several clauses that allow the buyer to back out without cause (or without explaining cause).  We always leverage this to our advantage for our clients.  For example, having a buyer purchase a home in as-is condition.  If a major issue such as a septic system failing comes up, your buyer has the ability to walk away if they desire OR better yet they can leverage MD disclosure law against the seller stating if the sellers do not fix this clear new identified latent defect the buyers will then walk.  Inevitably the sellers are almost required to address the issue.

We say it all the time, it matters who you work with.  I can tell you we win more competitive offer situations than most and that’s because we sell more homes than most allowing us to understand what is really important to a seller.  Make sure when you are bidding on your future dream home, you have the right agent working for you.