I was reading a post from Todd Clark and there some comments made that made me come up with this post.
In the Real Estate business we love to throw around words and terminology; yet often they are not exactly accurate. We are not lawyers; but we are so close to practicing law - it is sometimes scary! Note: I am NOT a Lawyer; but this is how I see things.
Realtors and their clients need to understand some basic terminology. The most important is the word "CONTRACT".
Contract: A contract is an exchange of promises between two or more parties to do, or refrain from doing, an act which is enforceable in a court of law. It is a binding legal agreement
One of my biggest pet peeves is when an agent calls me and says; my buyer and I are sending over a contract for you to present to your sellers. First of all it is called an Offer or Purchase Offer. It is NOT yet a CONTRACT !
In fact; you don't have a CONTRACT until, all parties have agreed on the terms; signed the contract (including any changes made) and the last party to sign; delivers it to the other party.
THEN it is a CONTRACT. You may have a "Verbal" agreement or contract; but Verbal contracts are not enforceable in Real Estate.
Now comes THE SHORT SALE ....
Here is where most Realtors and Brokers cannot agree. A short sale is a sale which must have the bank/lenders approval before the home can be sold/bought. Many Brokers and Agents say: It's not a contract until the Bank Approves it. Well in a traditional sale; a contract is still contract while the buyer waits for an answer from the lender. What makes this any different?
OK; so can someone tell me where in the CONTRACT; does it say the bank is a party to the contract? They are not. The contract is between the sellers and the buyers. NOT the bank. If the Buyers and Sellers have signed and delivered the purchase offer it IS now a contract.
Of course the argument is that the sellers cannot go through with the contract without bank/lender approval. Does that mean it's not a CONTRACT?
I see it as a CONTRACT until (and we all know it can take months) the bank says "NO" - then the contract cannot be executed by the seller and must be canceled.
Know the difference between an OFFER, a CONTRACT, and a CONTRACT with conditions (like Bank Approval).
Call James for all your Real Estate needs and questions; servicing Virginia, Maryland and the GreaterWashington DC area.
Coldwell Banker Residential Brokerage - Chevy Chase
5028 Wisconsin Ave NW Suite 100
Washington DC 20016
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