There are several contracts to sign when buying a Florida home. Purchase contract, closing statement, terms, addendums and more addendums. Nothing too difficult to figure out. So why is it that many agents that are involved in the Real Estate transaction just don’t bother to read or understand what the contract really says…they should know.
Here is my top pet peeve:
When the listing agent does not know what the purchase contract says or means. There is no excuse not to know what the basic FAR-BAR residential contract states. “Far-Bar” stands for the Florida Bar contract, written by Florida attorneys. These contracts are revised only every few years, so it is not difficult to keep up with the changes when they do come up. There are Realtor contract classes that they can go to learn, and there are also online classes that they can visit at their leisure. Most of these classes are free, so all agents just need to do it!
The biggest problem comes when a buyer offer is submitted and the listing agent either mis-reads the terms, or does not understand the legal requests. Therefore, they just choose to do “what they think” rather than referring to what the contract actually states.
Problem is, the listing agent might give the seller bad information….or simply put their own negative spin on the buyers offer. Although the Realtor code of ethics says that all listing agents must submit all offers quickly and objectively, that is not the norm. Many listing agents start out by putting their own personal feelings into the negotiations. Purchase contracts are not a personal negotiation…a purchase contract is strictly business. It is a legal agreement between the buyer and seller.
While agents not understanding the terms of contract can be the norm, it is not always a problem until there is a request from one party to another party to perform under the terms of the contract. Then the dispute begins. Mis-information leads to conflict…this is a difficult time to try to educate a broker that does not know what the contract says…ugh, I hate it!
Recently, I had a listing agent insist that we MUST use their title company. When I pointed out that the bank contract says just the opposite, they responded with “Yes, I do know what it says, but that is not what we do…”
The bottom line is that it does not matter what anyone WANTS to do, or FEELS like doing. Both the buyer and seller must follow the same contract…so both the sellers agent and the buyers agent need to be knowledgeable and understand the contractual terms that both parties agreed to. They also need to stop acting like it is up to them to make the decisions. Contrary to what some think, the agent is not “party to the contract” so brokers need to butt out of buyer/seller decisions.
Terms of the contract
Every contract contains the “instructions” about what is expected in the purchase contract. Everything in the contract is negotiable between the buyer and seller. Here are some typical terms to negotiate:
- Purchase price
- Date of signing the contract
- Date of closing
- Place of closing
- Escrow deposit amount
- Inspection due date
- Who pays for repairs
- Financing deadline
- Proof of loan approval
- Who pays for title insurance
- Closing costs
- Pool equipment
- Misc. furnishings
What is negotiable in a home purchase contract?
Everything is negotiable, before the contract is signed by both parties. After a mutually accepted and signed contract, buyers and sellers both have to agree (and sign) any changes in order to make the changes valid and enforceable. Buyers and sellers can agree to any terms they want…there is nothing off limits, as long as it is agreed to and signed by both parties. ( Buyer and seller)
Is Florida a “statute of frauds” state?
Yep…sure is. Statute of frauds means that a contract must be in writing in order to be enforceable. Verbal agreements mean pretty much nothing. This is required in order to eliminate fraud in real estate transactions. If it is not written and signed, it does not exist as a term of the contract. This eliminates the famous “he said-she said” disputes.
Who has control in a Florida Real Estate Contract?
I believe the buyer has the upper hand and here are my top reasons:
- The buyer is the one who is making the offer, so they are the one to submit the price and terms that best suits them.
- The buyer is the only one who gets to choose to cancel the contract.
So let me expand on this…
The seller is at the mercy of what the buyer thinks the property is worth or who is paying the closing costs, or who is required to fix the deficiencies. The seller is not calling the shots. The seller can either accept, reject or counter offer the buyers offer. If the seller is unreasonable, the buyer simply moves on to buy another property…and the seller’s next offer may not be as good as this one.
Contrary to popular belief, the seller does not get to kick the buyer out of the contract. The contingencies in the contract (inspections, appraisal, financing etc.) are for the benefit of the buyer and not the seller.
If the inspections reveal too many deficiencies, the buyer can ask the seller to fix it, or lower the price, receive a closing cost credit or cancel and get a refund of their escrow deposit. The only choice the seller has is to try to work a deal with the buyer.
If the property appraisal is short, the buyer can ask for a price reduction, put more money down or go buy something else. Again, the sellers only choice is to try to work a deal with the buyer.
When issues come up, many listing agents love to pressure the buyer to agree to things that are not acceptable by saying…”well, the seller will just cancel the contract”. Really? Not so. Read the contract, licensed real estate agent…
So, how can a buyer get the best deal?
Hire an Exclusive Buyers Agent (EBA) from a Buyer Brokerage Office. That alone will determine your home buying satisfaction. They only represent homebuyers and never sellers. They do read and understand the contracts and will help you become an informed consumer. Why settle for less?
Most Florida agents work as Transaction Brokers which is only a middle person with no loyalty or fiduciary duty. Forget what a Transaction Broker claims, read the legal definition of what they cannot do for you…no loyalty, no full confidentiality and no full disclose… that’s the law. Don’t be bamboozled!
Florida is a state with no mandatory agency disclosures…which means brokers do not have to tell you that they work for the seller and not you. That means their job is to sell the property for more money. How unfair is that? Very misleading, because most home buyers assume that the agent that is acting like their best friend is working for them…not true. This is why every Florida homebuyer needs their own advocate…an EBA.
Informed homebuyers will always choose an Exclusive Buyer Broker that works in a Buyer Brokerage office. That office never represents sellers, which eliminates the conflict of interest. Call Buyers Broker of Florida for a no obligation, no pressure, complimentary phone chat about your best buying options. 407-539-1053. You will be glad you did!
In case you cannot view this video here, please click the link below to view Read the Contract… Licensed Agent on my YouTube channel: https://www.youtube.com/watch?v=MgjHAqoaCZo&feature=youtu.be