Contract Blunders and Craziness

By
Real Estate Broker/Owner with Island Style Realty Inc. RB-19250

GavelIf you have selling real estate for any period of time you have seen contracts that just make you scratch your head.  Sometimes you see simple errors such as missing signatures, wrong addresses and misspelled names.  Other times you see outright scary stuff.

When I write contracts I live by a simple rule that a wise instructor once taught me.  If you write anything in the contract that takes more than a sentence or two you are practicing law.

A couple of months ago I had a run in with a broker-owner who gave me the craziest counter-offer I had ever seen.  He put four paragraphs of truly bizarre language in the special provisions that talked about the source, type, etc. of my client's funds.  He also included language that my clients would make up any difference between the appraisal and the sell price.  The funniest part was this was property had been on the market much longer than the norm.

I spoke to the agent and let him know that I am recommending that my clients reject this counter - offer because of his language.  He then preceded to council me on how to speak to my clients and I need to tell my clients that there are times they just need to take a chance.  I thanked him for his input and let him know that the only way they would sign it was when Waikiki gets a blizzard.  I also shared with him the following:

  • Me: I have never seen any language like that before in a contract.
  • Seller's Agent: That is standard language!
  • Me:  I not only have never seen this language before, but I past this contract around to several very experience agents.  Not one had ever seen anything like it and not one would allow their client to sign it.
  • Seller's Agent: You are telling me you have never seen this type of language?!
  • Me: (Thinking it was time to cut this off) I have never seen this in an accepted offer!  This is how I see it.  You have a seller who is motivated; I have a qualified buyer who wants to buy this home.  You just have to answer one question.  Are willing to step out of the way and let this sale happen?

He did and the sale closed.  I have since received referrals from my buyer's who love the home.

Many real estate companies are coming out with their company addendums.  I received an offer on a home I was selling that included a company addendum from a new real estate company I had not heard of. 

  • I read their addendum.
  • I made copies and past it around the agents and brokers in my office. 

Boy did we get a laugh.  It was three pages long.  It went line item by line item of the DROA with their definitions of what each part of the DROA meant.  It wasn't bad enough that the three pages were trying to change the meaning of the contract provisions.   That alone would have been enough to kill it.  It was worse than that.  Apparently who ever drew this up document had English as a second language and didn't know how to use spell or grammar check.  It had more typos and grammatical errors than you could count.  We countered the offer to remove the addendum and otherwise accept their offer.  It was accepted and we closed on that property.  

There were a couple of common elements in these two transactions. 

  • In both cases real estate agents attempted to practice law.
  • Neither were lawyers and neither had a clue about what they were doing.

And as you may have guessed I had to do a lot of extra work in those transactions.

I am sure you have good examples of messy contracts you have seen in the course of your travels.

 

Posted by

 

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Randy L. Prothero, REALTOR®

Principal Broker, ABR, AHWD, CRS, e-PRO, GRI, MRP, SFR

Island Style Realty Inc.

Team Leader - "The Prothero Group"

Randy Prothero is well established as an expert in working with military / VA clients and first time home buyers.  His home seller's (listing) campaign is one of the most aggressive marketing programs in the area.

Based out of Mililani, Hawaii. Randy services the island of Oahu (Honolulu County) Performs mediations and ombudsman services for the Board of Realtors.  To improve overall professionalism in his area Randy also offers classes for real estate agents. 

www.HawaiiRandy.comOahu (Honolulu County) Property Search  Hawaii Military Relocations

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Comments 32 New Comment

Show All Comments
Rainmaker
619,931
Randy Prothero
Hawaii REALTOR, (808) 384-5645
Island Style Realty Inc.
Norm - Both agents can wreck your day.
November 28, 2006 08:24 PM
Ambassador
1,470,951
Renée Burrows
Las Vegas Real Estate Broker - www.urLVhome.com
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate
Many companies here have those monster counters with their own built in disclosures.  Some are good but some are WAYYYYYYY out there!
November 28, 2006 08:25 PM
Rainmaker
111,716
Carl Guild
Central Connecticut Real Estate
Berkshire Hathaway Home Services New England Properties
Fill in the blanks - Anything more and its just asking for trouble. Great post and reminder that Im not a lawyer!
November 28, 2006 08:28 PM
Rainmaker
371,472
Leigh Brown
Broker/Owner - Charlotte NC
RE/MAX Executive Realty
excellent points-it's so tempting to want to practice law with language...but no matter how experience we are, we ain't lawyers and heaven knows i don't want to go up against them if it goes south!  the best point you made was that we have to GET OUT OF THE WAY of a sale sometimes.  you're not protecting anyone, acting like that agent!
November 28, 2006 08:29 PM
Rainmaker
136,149
Kaye Thomas
e-PRO, Manhattan Beach CA
Real Estate West

 I never ceased to be amazed by what can be written into an offer or how quickly an agent can mess up a transaction. 

As to forms that are company specific...Our office policy when it comes to Broker addendums and disclosure forms for a specific company is to decline to sign anything not required by the California Association of Realtors.  Technically they can't require you to sign their forms..

 

November 28, 2006 09:03 PM
Rainmaker
157,577
1SG (Ret.) David Kucic
President and Owner
Hawaii Military Realty, Inc.

Those company addendums kill me!  I have run into at least 3 different ones.  There is no way a lawyer wrote those addendums.  In all cases, my buyers did not accept the company addendum (the DROA covers everything already) and all of my transactions closed successfully.  If companies feel as though the DROA needs to be amemded, they should send their input to the local board of realtors and suggest changes.

 

November 28, 2006 10:45 PM
Rainmaker
619,931
Randy Prothero
Hawaii REALTOR, (808) 384-5645
Island Style Realty Inc.

Renee - I am amazed that some of these companies would insert themselves to that level in a transaction.  Those who also do mortgages and other services seem to have the longest.

Carl - Thank you

Leigh - Good point he was just somehow feeding his ego.  It also fed the round file.

Kaye - I had a transaction where the agent from the other side did not include their company addendum.  After we were in escrow she called me up kind of desperate.  She needed to get us to sign it ASAP.  Her company refuses to pay the agents commission if it is not signed.  My client signed, but it was not required.  The other agent was good to work with and we didn't want to cause her the grief.

November 28, 2006 10:53 PM
Rainmaker
619,931
Randy Prothero
Hawaii REALTOR, (808) 384-5645
Island Style Realty Inc.

I recently closed a transaction where the seller's agent was also an attorney.  I had to ask her one question.

I constantly get asked legal questions that I am not allowed to answer.  I always recommend they seek legal council.

Being an attorney how do you answer legal questions?

She said she tells them to seek legal council.  She is only acting as their Realtor.

November 28, 2006 10:58 PM
Rainmaker
619,931
Randy Prothero
Hawaii REALTOR, (808) 384-5645
Island Style Realty Inc.
David - I crossed your post.  Great point!  Those are the ones I recommend my clients not sign.
November 28, 2006 11:04 PM
Rainer
213,882
Adam Tarr
PC -GRI, ABR, CDPE, RSPS, ePro - Associate Broker
Citywide Real Estate
To paraphrase an old tv ad, " I'm not a lawyer, but I play one on TV".  Unforutnately, too many agents think they can act the other part.  Good job of handling these situations to get them done!
November 28, 2006 11:15 PM
Rainer
119,286
Sean Carroll
Real Estate Speaker and "Expert" Coach
The Get Off Your A$$ Academy

Great job with that dialogue. Here in Northern NJ, attorney review would boot any odd stuff like that out usually, but I still always like to preface any opinion with "You need to check with your attorney on that one"

November 28, 2006 11:22 PM
Rainmaker
619,931
Randy Prothero
Hawaii REALTOR, (808) 384-5645
Island Style Realty Inc.

Adam & Sharon - I don't even want to play a lawyer.  I might get sued.

Sean - We don't have attorneys review out contracts usually.  Our forms have been developed by a team of attorneys for the Association of Realtors and they are constantly upgraded to conform to any new laws.  We do require a brokers review and signature on all contracts.

November 29, 2006 12:55 AM
Rainer
94,355
Doug Beaver
Corona Norco Eastvale Riverside Homes
Century 21 Olde Tyme

How about the offers you receive where the following occur:

1. Agent did not sign there offer.

2. Blanks in Area's Like Possesion, Financing, Agency Just Misc. Irregularities that I now need to address to protect my clients best interest.

3. Counters with basically the same terms as in the original contracts.

4. Agents that no matter how many times the Fax it or How many different Fax Machines they go to, It just comes across with lines or white areas with no print. Forcing you to have them either deliver or I actually countered and stated Seller needed a clean legible signed copy to review to acknowledge and agree to before we start escrow.

You know most everything we need is already in the contract and there really is no reason to complicate the transaction.

November 29, 2006 04:56 AM
Rainer
8,907
Chichi E. Ahia
The Ahia Group
KW Commercial | Keller Williams Real Estate
Baby in Suit That is HILARIOUS! I love when I get addendums like that. Normally, I ask just one question to the other agent... "What is the objective are you are trying to achieve?" Probably more than half the time, that question is met with extended silence during which I am SURE that the other agent is reading THEIR OWN ADDENDUM and attempting to even understand it for themselves. You gotta love this business!
November 29, 2006 10:18 AM
Rainmaker
345,613
Suzanne Marriott
Associate Broker, CLHMS, e-PRO
Keller Williams Arizona Realty
Here's a scary item for you - in Arizona - Real Estate licensees ARE permitted to practice real estate contract law - it's even part of the Constitution of the State of Arizona!
November 29, 2006 10:35 AM
Rainmaker
204,657
Chris Tesch
College Station, Texas Real Estate
RE/MAX Bryan-College Station
That is a scary thought in Arizona.  I know TX attorneys that are agents as well and they are some of the most "get in the way of the deal" people you would ever want to see.  Half the time the language is obscure.  (If the party of the first part engages the party of the second part...WAIT...who's on first?) I try to keep my contracts as clean as possible. 
November 29, 2006 11:07 AM
Rainer
27,563
Geno Petro
ChicagoHomeEstates.com

My stock, top 2 retorts are: "I purposely didnt go to law school so I purposely wouldn't become a lawyer."

And there's my all time favorite from the 'Watergate' era:

"To the best of my knowledge, at that point in time, I don't recall..."

I strongly advise my Sellers to embrace two key words (concepts) when preparing to list a property: Disclaimer and Disclosure...what you know and what you dont know. Oh, and
that 'neatness counts!'

 

November 29, 2006 11:25 AM
Rainmaker
619,931
Randy Prothero
Hawaii REALTOR, (808) 384-5645
Island Style Realty Inc.

Doug - You are bringing back bad memories.

Chichi - Dead silence, don't that make you feel like you are dealing with a pro.

Suzanne - That is scary!  In Hawaii my broker's license allows me to perform escrow services.  I am a Realtor, not an idiot; I won't try doing an escrow under any condition.

Chris - Attorneys can complicate going to the bathroom.  Having them in the middle of a residential sale is too scary to think about.

Geno - I tell my clients spill your guts.  If in doubt disclose it and have the other side sign off on it.  They can never come back later on the issue it is now off the table.

November 29, 2006 12:27 PM
Rainmaker
263,238
Jay Beckingham
Premier Nationwide Lending

occasionally i will get a contract where the closing date is before the mortgage commitment date. i use to try to explain to the agent involved why this was incorrect but i must admit that i have now given up.

usually there are 2 agents involved. i've often wondered how the listing agent explained this to the seller? 

June 26, 2007 01:29 PM
Rainmaker
619,931
Randy Prothero
Hawaii REALTOR, (808) 384-5645
Island Style Realty Inc.
Jay - I have sen them where the dates make no sense at all including several offers that the offer was expired before they sent it to me.
June 26, 2007 04:01 PM
Show All Comments
Rainmaker
619,931

Randy Prothero

Hawaii REALTOR, (808) 384-5645
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