Imagine walking alone in a city you’ve never visited before. It’s nighttime. A handful of unfamiliar faces linger on the sidewalks as your Google map tells you you’re still six blocks away from your destination. Are you a little nervous? Maybe you put on a brave face, but deep down, you recognize this playing field isn’t level. Night streets belong to people who know what you don’t.
Some people look at selling their home with the same kind of trepidation because they know they will be doing business in an arena where other people have an advantage over them. In my experience, our clients rely on us as trusted guides to help them avoid negotiation pitfalls, illuminate potential risks in the purchase agreements, and ensure they don’t end up trapped in the dark alleys of contingencies like this one:
When reading contingencies, it’s wise to acknowledge three things: (1) every word, punctuation, and sentence is intentional. (2) The contingencies are designed to give the BUYER a way out of the offer, or at least a way to force a renegotiation. (3) You must carefully read every sentence.
The example above is taken from a local broker’s addenda. These are the kind of traps you don’t want to step into. The contingency might look harmless, but to me, it’s a landmine. Read the first sentence slowly. It is understood that if the Buyer’s home inspector recommends that additional inspections/tests be completed, Seller agrees to that portion of the inspection being extended for 10 days from the Buyer notifying the Seller of the need for the extension.
Let’s break this down.
1) If the Buyer’s home inspector recommends additional inspections/tests… Inspectors sell radon, mold, lead paint, air quality, and water tests. Inspection agreements include statements where the inspector recommends testing.
2) Tests. The standard Wisconsin purchase agreements state that testing is not permitted unless the parties agree. This provision seems to open the door for the inspector to test without the seller’s knowledge and without the parties establishing standards for acceptable results.
3) Seller agrees to that portion of the inspection being extended for 10 days from the Buyer notifying the Seller of the need for the extension. If the buyer notifies the seller within 10 days of accepting the offer, the contingency lasts for 3 weeks. That’s an inordinate amount of time for the seller to be tied up in uncertainty.
In a real-life scenario, faced with this contingency, the seller declined to accept the offer with this provision included. The buyer’s agent initially contended that the contingency didn’t mean what we thought it did. Later, the agent confirmed we were right. Well, right or wrong, as long as the contingency was unclear to the parties, the ambiguity posed a problem lurking in the shadows. This offer was not accepted, and the seller accepted another that offered a clear path to closing.
Our clients are the heroes in their home-selling stories. Our role is to be a trusted guide. We know they value our expertise. Our clients and customers are good people, and we like seeing good people win.