I was helping someone recently with a sale of their home. A potential buyer came along with a large earnest money and promised a quick close – 10 days. That’s amazing! Thankfully, they asked their attorney (me) to review the contract. Here’s what I found: they had an Addendum that talked about an “undisclosed principal”, in other words, the Buyer wasn’t really the Buyer. The agent was acting as a Buyer, but only for purposes of submitting the offer. The Buyer making the offer wasn’t going to be responsible for the real contract. If the Buyer backed out, you’d have to fight with the agent, the broker and the undisclosed Buyer. So I made some simple changes to make sure that if there was a breach by the unknown buyer, we could keep the earnest money. Suddenly the Agent wasn’t so willing to put a big earnest money down …and then wanted to extend the time for closing and other concessions. What was up?! And the agent was still unwilling to disclose the Buyer because “if we knew, then we could discover the true Buyer’s “trade secret” that they are using to buy hundreds of properties.” Really?!!! Call me cynical or maybe too old to learn new tricks, but I’ve never yet come across a “trade secret” way to buy and sell real estate. It takes real money and it takes real people.
Needless to say, the further down the path we went, the flakier it seemed. The Agent then told the client that they didn’t want to work with me! Why? Because I wanted the contract to say what they were promising? Or was it because I was changing the contract so they really did have money at risk, instead of a phony “trade secret” way to buy real estate. I advised the client to back away from the deal. Better not to get down the path and waste a lot of time and effort and be frustrated with a negative result. Sometimes you can even get a deal like this tied up in court and can’t sell your property for months or years. I have worked with many excellent real estate agents over the years and many excellent attorneys. But I have yet to work with a real estate agent with the same contract drafting skills as a good real estate attorney, and I have yet to work with a good personal injury attorney who is just as skilled in drafting real estate contracts. You gain expertise by education and experience. My advice to all is to have a good real estate attorney review your residential purchase and sale contracts. For the biggest investment most people make in their lifetime, it’s worth the peace of mind!