Tick Tock

Ticking clock on real estate contractsTick Tock!  In the hot Cincinnati housing market buyers are running out of time and losing.

What do buyers do when they get a signed contract?  Most celebrate, calling family and friends announcing victory.  But the celebration may be shortlived if the buyers (and their Realtor®) don’t set the timer to meet all the dates and times in the purchase contract.

It’s important to remember the “Contract to Purchase” is a legally binding document.  In the old days, the purchase contract was “bi-lateral” and didn’t favor one side or the other. Today’s contract seems to favor sellers.  And some sellers, sensing a better deal from the next buyer, are zeroing in on contract dates and times to legally extract themselves from the current contract. 

What Contract Dates?

Let’s begin with the easiest dates to miss:

  1. Earnest Money-needs to be submitted and deposited with a specified number of calendar days.  The earnest money needs to be in the hands of the responsible real estate company and the seller’s agent notified in writing.
  2. Financing Contingency– includes requirements for qualification letter, loan application and loan approval.  All have date and notification requirements.  
  3. HOA Document Review– the date the seller provides the documents. The contract also dictates the timeframe the buyer has to review and accept or reject the docs.
  4. Home Inspections– probably one of the most misunderstood timeframes on the contract.  Buyers have a certain number of days to thoroughly inspect the property and negotiate resolutions.  The clock starts ticking as soon as the contract is signed by all parties and delivered.
  5. Conveyance and Closing – on or before the date specified in the contract.  If something goes wrong during the process all parties need to agree in writing to extend the closing date.


The Impact of Contract Clauses

The purchase contract contains lots of requirements for buyers and sellers.  Cincinnati’s fast-paced home sales are driving some people to electronically sign and skip reading the fine print.  And as long as everybody is happy the property closes.  However, some sellers are sitting with 1 or maybe 2 backup offers.  And sellers hoping to cash in on a better offer sometimes read the fine print regarding dates and dump buyers who don’t dot their “I’s”.

Buyers and their agents really need to take a breath and review the entire purchase contract before it’s signed.  The best time to discuss the contract ins and outs is during the buyer’s counseling session.  

After the purchase contract is signed and sealed lots of agents provide a written timeline to their buyers so everybody is on-time.  Tick Tock the clock is ticking on home sales.  But taking the time to read and understand all the ins and outs of the “Contract to Purchase” keeps the process from becoming a time bomb!