Real Estate Contract Negotiation
Real Estate Contract Negotiation. Real Estate Contracts can vary drastically depending on whether they were drafted on the buyer’s or the seller’s terms. It is always better for you to get the real estate contract drafted on your terms.
How to negotiate real estate contracts
Once you have successfully negotiated the price of the property, negotiate the contract. And always read through the entire contract to make sure there are no unfavorable terms added. Do not think that the contract is a standard contract simply because it has a header which says ‘Standard Buyer’s Contract’.
Real Estate Contract Negotiation: Offer to do the menial work
That means writing up the contract and preparing all the necessary documents – menial tasks that most people would prefer not to do themselves. Offer to do this for the other party. Yet, you will also realize that you then have control over the wording of the contract and can naturally word it to your advantage.
Contracts titled ‘Standard Buyer’s Contract’ or ‘Standard Seller’s Contract’ will tend to lead the other party to think that the terms are non-negotiable.
Another negotiating tip: most people tend to focus on the words on the contract – and not what is omitted.
Real Estate Contract Negotiation: Contingency Clause
As Robert Shemin advocates, always add in a contingency clause. Some good examples include the following:
- ‘This contract is contingent upon the buyer’s partner’s inspection and approval before closing…’
- ‘This contract is contingent upon buyer receiving favorable financing…’
That way, even if you might have signed the contract, you can still use this contingency clause to weasel your way out of the contract.
Negotiating Real Estate Contracts: Closing Costs
If you are the buyer, make the seller pay the closing costs and the title insurance costs. You are usually required to split this with the seller, but if you change this in the contract, you just might have a seller who is willing. (You will never know until you ask!)
Negotiating Real Estate Contracts: Earnest Money
Request not to put in any money. And if the realtor insists, you could say something along the lines of, ‘How much interest will you pay me on that money?’ – follow that by ‘I earn XX to XX percent on my money through my other investments’.
Negotiating Real Estate Contracts: Other Legal Issues
Always add in the clause, ‘I do not represent you or your interests’ if you are selling the property to other investors.
Negotiating Real Estate Contracts: Legal Adviser
Do make sure that you engage a legal advisor whom you can trust to guide you through the entire contract negotiating process. This is especially important for your first few negotiations, as there are minute details that can make a lot of difference; you do not want to be in for any nasty surprises later!
Succeed in Real Estate Contract Negotiation
Successful real estate contract negotation can in itself save you even more money, and help you build strong industry relationships and networks.