Do Sellers Have Rights In Today's Marketplace? Almost every discussion regarding real estate and consumerism is based on the premise that buyer rights need to be protected in a complex marketplace. That's not an unfair perspective, but what's largely overlooked and undervalued is the notion that sellers also have rights, risks and costs. Sellers should see themselves as consumers with interests that are naturally and reasonably different from buyers. Given this marketplace reality, and given the complexity of today's sale arrangements, it simply makes sense for owners to defend their financial well-being. Buyers in a realty transaction are protected with a web of inspections, surveys, termite checks, title exams, appraisals, financial contingencies, legal reviews, and property disclosure forms. And owners -- in the best circumstances -- have a big deposit. This sounds like a fairly even match-up until you take a closer look. By having an assortment of tests, checks, and inspections buyers effectively make contingent offers to purchase, not final offers. "I'll buy your home if it meets certain conditions," say contingent offers, "but if those conditions are not met, I get my deposit back in full and can walk away without penalty." This arrangement is not unfair. A home is a complex product and buyers reasonably have a right to make certain that what they see is really what they're getting. That said, the perception of buyer protections has changed in the past decade. For instance, home inspections are intended to show the general condition of a home, major structural defects or concerns, and possible repair costs that might be expected in the next few years. But now many buyers seem to think homes should be perfect and that every crack and mar found in a home inspection should be fixed. In many cases, a home inspection is simply a tool which buyers use to re-open negotiations by seeking new terms and/or lower prices. Another approach is the use of a contingency as an option. The buyer says, "I'll buy your home provided the structural inspection (or legal review, or visit by my cousin Ralph) is satisfactory to me. I have x business days to get this review completed." What is the test here? It's not whether the home is in good condition, an attorney likes the paperwork, or cousin Ralph is thrilled with the property. Rather, it is the question of whether the buyer finds the property "satisfactory." Suppose the property is in absolutely flawless condition. Can the buyer say it's "unsatisfactory?" Sure. ("I was really looking for a home to fix up and customize but this place is so good that I wouldn't be able to change anything....") The only person who can determine whether the property is "satisfactory" in this situation is the buyer. The result is that the buyer with such a contingency effectively has an option to buy the property at a given price and with given terms. And if the property magically turns out to be "unsatisfactory," then the contingency has not been met, the deposit is returned, and perhaps the owner has missed other sale opportunities. But what if the buyer defaults on the agreement. There's a deposit, so can't the seller simply keep that money? Real estate agreements typically provide for several types of damages in the event a buyer defaults. One option is to keep the deposit. A second possibility is to keep the deposit and seek additional damages. A third choice is to sue the buyer for "specific performance;" that is, compel the purchaser to go through with the deal. In practice, many real estate agreements say that in the event of default by the purchaser, the owner can either keep the deposit or seek additional damages. Some agreement forms allow owners to both keep the deposit and go for additional dollars. As to a suit for specific performance, there are few cases where a judge is willing to force a buyer to go through with a purchase that could not be made in the first place -- monetary damages are enough. So if a buyer fails to complete a purchase agreement the seller likely gets to keep the deposit, right? Not quite. First, the buyer may not feel that the deposit should be lost. In the event of a dispute, the deposit money held in a broker's escrow account will be turned over to a court or a state realty commission. It may take months for an owner to collect, if at all. Second, the owner is not the only one with a claim on the deposit money. Many real estate agreements provide that in the event of a buyer default, the broker is entitled to a portion of the deposit, up to the value of the commission. The logic is that the broker has spent money marketing the property, is also a victim of the buyer, and could have earned a fee by selling the property to another purchaser. Third, especially in a buyers' market, the deposit may be minimal. Even if the owner can collect, the dollars involved may not be enough to cover lost mortgage payments and taxes that the owner would not pay if the home had been sold. The bottom line: If I was a buyer I would use (and have used) every possible clause and term to protect my interests, and I'd make sure I had a savvy buyer broker to assist me. If I was a seller, when first listing a home I would go through local sale agreements clause by clause to better understand what they mean. I would engage a top broker because I would want the same professional fire-power as buyers -- or more.
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Question Of The Week Q We'd like to look at a home but the current owners have a huge variety of pets -- municipal zoos would be envious. How can we get in for a few hours -- and get the pets out? A I guess there's a lawyer somewhere who would argue that you have a disability and the owners are thus required to make a "reasonable accomodation" to meet your needs. But if you have severe allergies, this home and others may be require extensive and expensive cleaning and preparation after purchase. You may need to get rid of rugs, clean vents, upgrade heating and air conditioning systems, replace range hoods, etc. If the house is really desirable, then -- in a nice way -- explain the situation and ask for the owner's assistance. Most people with goods to sell tend to be helpful. Weekly Resource If you have a web site with a few pages, it's possible to have a good index with nothing more than a list of links. However, if you have a larger site -- if the site is for a company, franshise, MLS, or association -- then a search engine becomes enormously valuable. The problem is that on-site search engines are traditionally complex while search engines from third-parties are often free but loaded with ads and invasive data-collection practices. The alternative is PicoSearch.com, a search engine for individual sites that's easy to set up, works extremely well, and does not capture your visitor's screen IDs. PicoSearch solves a problem faced by many sites, and does so in a way which treats privacy issues responsibly. If you have more than a few pages on your site, PicoSearch is worth exploring. | 
