Hawaii Randy's Real Estate Opinions: Contract Blunders and Craziness

Contract Blunders and Craziness

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.

 

 

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Randy L. Prothero, REALTOR®

Broker-in-Charge, ABR, AHWD, CRB, CRS, e-PRO, GRI, MRP, SFR

eXp Realty

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.  His luxury home listings sell faster and for more money.

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

Comment balloon 32 commentsRandy Prothero • November 28 2006 02:28PM

Comments

I am not an attorney....Nope I am not attorney....sometimes I need to remind myself of that fact when I am tempted to re-write addendum's...some of them are so poorly written it's mind boggling.

We have a clause library on our State Associations website...it has forms and clauses that can be downloaded...very easy.  No need to re-write anything. 

Posted by Monika McGillicuddy, Southern NH & the Seacoast Area (Berkshire Hathaway HomeServices Verani Realty) about 12 years ago
Monika - Our contracts have been fine tuned by teams of lawyers.  I always remind myself as you do, I am not an attorney.
Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 12 years ago
Awesome point about one or two sentences in a contract...
Posted by Kaushik Sirkar (Call Realty, Inc.) about 12 years ago
Kaushik - Thank you, I try to keep it to one if possible.
Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 12 years ago
Can't top that story - made for a good laugh. It's amazing what some agents will try. I have not had anything that bizarre, but certainly lots of offers and counters where significant information was missing, made no sense, or was contradictory. Missing signatures here and there too. It's no wonder the legal profession is blossoming in the real estate arena.
Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (Solutions Real Estate ) about 12 years ago

That's a good one!

I was doing the financing for a property a little while ago and I noticed that the address was wrong - not missing a digit or 2, I mean noteven the right street!

I called the Agent to get it corrected - her response was:'So, go ahead and change it!'  I said that not only couldn't jst change it, but it would be a pretty go idea if they just got me a copy of a corrected and signed contract.  Her response was 'f you! - I'm busy'.

I couldn't believe it - and this was from an Agent at a major national company!

Posted by Marc Blasi about 12 years ago

Randy you went the xtra mile - i can learn from this -

Marc - just how did you handle that comment????

Posted by Diane Rice, SFR, SRES, CNC ( Rice Prprty Mgmnt & Rlty, LLC, South Holland, IL) about 12 years ago
Great story, in our area attornies are involved in everything.  One for the seller, one for the buyer and one for the bank.  Even then I have seen stuff i'd recommend changing.
Posted by Ira Freireich, EBA (Best Buyer's Broker Realty) about 12 years ago

Randy, if everyone just did their job and stopped being what they are not, all transaction would go by a lot smoother.

Marc, I love it "go ahead and change it" yet right, and will you give me a reference for my next employer? Don't you just love lazy Agents? 

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 12 years ago
Randy, Thanks for the laughs and the great advice! Just to be perfectly clear about this, if the party to the first part (Sec. A)would prefer to seek an action as party to the second part(Sec. C, pp.2-3), and the action begun by the first party in view of the second parties action should decline any further declarations of intent, all parties would then be considered to have released any liability for performance or no-performance by either party to that action; therefore all items are actionable. Please sign and print your name here______________________________
Posted by Michael S. Mackey, REALTOR ABR, CRS, GRI, RSPS (CENTURY 21 All Islands) about 12 years ago

Jeff- Attorneys are always near by.

Marc - I think a call to her broker would be appropriate.

Diane - Thank you

Anton - The 1 to 2 line has really helped keep me on track.

Ira - In our area attorneys are rarely involved except for commercial property.  I would like to keep it that way by doing clean transactions

Michael - You are too much.  The agent who wrote that skipped the GRI classes.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 12 years ago
Crazy story.  There are those who think they know the law better than those who designed the contracts and then there are those who have never bothered to read a standard offer to purchase.  I'm not sure which one frightens me more.
Posted by Norm Fisher (Royal LePage Saskatoon Real Estate) about 12 years ago
Norm - Both agents can wreck your day.
Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 12 years ago
Many companies here have those monster counters with their own built in disclosures.  Some are good but some are WAYYYYYYY out there!
Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) about 12 years ago
Fill in the blanks - Anything more and its just asking for trouble. Great post and reminder that Im not a lawyer!
Posted by Carl Guild, Central Connecticut Real Estate (Berkshire Hathaway Home Services New England Properties) about 12 years ago
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!
Posted by Leigh Brown, CEO, Dream Maker - Charlotte, NC (Leigh Brown & Associates, RE/MAX Executive) about 12 years ago

 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..

 

Posted by Kaye Thomas, e-PRO, Manhattan Beach CA (Real Estate West) about 12 years ago

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.

 

Posted by 1SG (Ret.) David Kucic, President and Owner (Hawaii Military Realty, Inc.) about 12 years ago

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.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 12 years ago

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.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 12 years ago
David - I crossed your post.  Great point!  Those are the ones I recommend my clients not sign.
Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 12 years ago
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!
Posted by Adam Tarr, PC -GRI, ABR, CDPE, RSPS, ePro - Designated Broker (MavRealty) about 12 years ago

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"

Posted by Sean Carroll, Real Estate Speaker and "Expert" Coach (The Get Off Your A$$ Academy) about 12 years ago

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.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 12 years ago

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.

Posted by Doug Beaver, Corona Norco Eastvale Riverside Homes (Century 21 Olde Tyme) about 12 years ago
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!
Posted by Chichi E. Ahia, The Ahia Group (KW Commercial | Keller Williams Real Estate) about 12 years ago
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!
Posted by Suzanne Marriott, Associate Broker, CLHMS, e-PRO (Keller Williams Arizona Realty) about 12 years ago
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. 
Posted by Chris Tesch, College Station, Texas Real Estate (RE/MAX Bryan-College Station) about 12 years ago

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!'

 

Posted by Geno Petro (GenoPetro.House) about 12 years ago

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.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 12 years ago

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? 

Posted by Jay Beckingham, Seniors ROCK! (Fairway Independent Mortgage Company) over 11 years ago
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.
Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 11 years ago

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