Didn’t they tell us years ago that we’d be a “paperless society” in the near future? Somebody forgot to tell the real estate industry. There must be a form for every single step in the selling process.
In all fairness, real estate is fully in the 21st century, with online document signing and other tech wizardry.
Still, the amount of paperwork you’ll sign, whether digitally or in hard form, from listing to close, is amazing. One thing is for sure, you’ll never, ever forget how to sign your name after this!
While every form I put in front of you for your signature is important, I thought we’d take a look at those that most of my selling clients have questions about.
Is it an addendum or an amendment – and why should I care?
Even some real estate professionals get confused over the difference between an addendum and an amendment.
An addendum is something that is added to the purchase agreement (the contract) before it becomes officially valid (known as “ratification”).
If you were performing a short sale, for instance, we would provide the buyer with a short sale addendum before we accept their offer. Although a separate form, it will become part of the contract.
An amendment, on the other hand, is something that is added to the contract after it is signed and accepted. It is an addition to, or change in, the contract.
Amendments are not uncommon and they are used for everything from a request for payment for repairs (after the home inspection results come in) to changing the closing date.
It’s easy to remember the difference if you think about our Constitution
All those constitutional amendments we know and love were items added AFTER the Constitution was ratified, right? They aren’t called Constitutional addendums, but amendments.
Addendums are separate forms that are part of the contract before it is ratified and amendments come after it’s ratified.
Contingency release form
A contingency is, simply, a condition. Think of the buyer as saying “I will buy your home if X comes to pass by THIS DATE.”
The “X” can be anything from loan approval to acceptable home inspection results to the home appraising for the agreed-upon sale price.
There is always a date attached to a contingency; a time limit under which the contingency must be removed or the buyer is in violation of the contract’s terms.
There are seller contingencies too. The most common has to do with supplying the buyer with the homeowner association documents by a certain date.
There is a form that will officially acknowledge that a contingency has been performed and the buyer or seller is released from the responsibility to perform.
Although at first blush they may not seem like it, disclosures are your friend.
By law you must disclose certain things about your home to the buyer. That one is the most important disclosure. There are, however, others that you’ll need to understand.
I’ll give you an agency disclosure, for instance. This form simply discloses (makes known) our relationship and discloses to both you and the buyer that I am working for you.
The buyer’s agent will also submit an agency disclosure telling us that he or she represents the buyer.
The most important disclosure, as mentioned above, is the property condition disclosure. This is typically filled out by the homeowner when the home is listed.
It details just about everything that could be wrong with the home, the neighbors and the neighborhood.
You are required to disclose everything you know about the home that may materially affect the home’s value and the buyer’s enjoyment of the home.
Yappy dog next door? Disclose it.
Teenagers playing loud music on the weekend? Disclose it.
Formerly leaky roof that you patched? Disclose it.
It may seem you are sabotaging your sale by telling the buyers negative things about the house and the neighborhood, but you are actually protecting yourself from costly litigation in the future.
If you have any questions about disclosure requirements in our state, please ask. I’m happy to walk you through them.
NOTE: Never sign any forms during the listing and sale process that you don’t understand.
Although I am not an attorney and cannot give you legal advice, I can explain the meaning of each form that I put in front of you for your signature.
And, you are always welcome to run everything by your lawyer.
Now, let’s get that home sold!