An offer! So, you got an offer on your house. Now what?
First you talked about putting your home on the market. Then you sought out a top real estate agent and listed your house for sale. Given the real estate market across the country in recent years, with Chicago and the surrounding suburbs being no exception to what has essentially become a “buyer’s market”, the decision to list your house for sale was probably done with at least a bit of skepticism and perhaps some anxiety. Many would-be home sellers are kept awake wondering things like “What if I don’t get any offers?” “What if I only get low-ball offers?” “What if I get buyers from hell?” “Did I price it too high?” “Did I price it too low”? Then, after weeks or maybe months of fretting, they are presented with a written offer. And then they think, “Now what? Do I sign?”
If you have just been presented with a written offer in the Chicagoland area or the surrounding suburbs of Chicago, you are most likely staring at the Multi-Board Residential Real Estate Contract. This contract was drafted by the Illinois Real Estate Lawyer’s Association (IRELA) and is what has become known as the common contract. It is often used in the geographical area which constitutes the counties Cook, DuPage, Lake, McHenry, Will, Kane, and perhaps a few others. It is a long document consisting of 13 pages, which can be daunting to anyone who is not intimately familiar with it. On the one hand, you want to be careful because you are entering into a legally binding contract but on the other hand, you don’t want to wait forever either lest the buyers look elsewhere. A pen is put in your hand…. You really want to sign but…. do you sign or take it to a lawyer?
If you are hesitant to sign because you don’t understand each and every provision contained in the 13 pages, and you were taught not to sign something that you don’t fully understand…. you are right to feel some trepidation but as long as you are signing the Multi-Board Residential Real Estate Contract (and not a “knock-off”, they do exist!) or something similar which allows for an attorney review period. Of course, that you are in agreement on the basic provisions which are usually those that are hand-written in. Do pay extra careful attention to those hand-written portions. Those provisions will usually dictate price, closing date, lending terms, and whether or not your buyer is asking for any contribution from you for their closing costs or asking for an “out” in case they can’t sell THEIR home. Hopefully you are working with a really good realtor who can advise you on whether or not the price being offered it is appropriate, as this is something that your attorney will NOT be able to advise you on, nor is there an “out” in most real estate contracts solely based on a change of heart as to the price offered or the price accepted. In other words, you had better be sure that you are okay with the price being offered, based hopefully on proper guidance from your realtor and a fairly good idea of what will end up in your pocket after any existing loans on the house are taken care of and all of your costs are paid.
The mistake that I have seen some sellers make is not hiring an attorney right away to review the contract. Your contract will specifically tell you if you have time to let an attorney look at the contract after you sign it, allowing you to either make changes or back out. You need to find this part in the contract, at the very least, before you sign it. Most contracts will give you five days. Others will give you three days. Others will let you take it to an attorney but will not let you negotiate changes or back out, which makes the attorney review provision worthless in my opinion and you might want to get legal counsel before moving ahead. Before signing, look for this provision (often called “Attorney Review”) and make sure that you understand it. Your realtor should be familiar enough with the contract to be able to point out to you the appropriate section. THERE WILL BE A TIME FRAME. For instance, the Multi-Board Residential Real Estate Contract version 5.0 gives the parties five days. If they do not hire an attorney on time, they may be out of luck if they wanted to make any changes. Sometimes I have seen sellers being asked to initial things that are not explained to them in advance, for fear (real or imagined) that if they don’t return a signed contract RIGHT AWAY, they will lose a buyer.
To some extent, you may be able to make changes to the real estate contract after you have signed it, upon the advice of a good real estate lawyer in the area of Chicago and suburbs. That being said, those changes have to be accepted by the buyer, usually after talking to their lawyer. So, there is no guarantee that either side will have their changes accepted.
For the most part, the standard language of the Multi-Board Residential Real Estate Contract is pretty fair in most instances. Just make sure that not only do you hire a real estate attorney as early on in the process as possible but also that you have that attorney EXPLAIN the contract to you. Not all of attorneys will do it. I believe that it is important that you, the seller, understand the obligations that you have agreed to, to make sure that you are okay with those legal promises that you have made. If they are not okay, I believe that your attorney should make sure that it is addressed as early on as possible so that you feel comfortable. By the same token, you need to know what the buyer’s obligations are. This will make the whole process less nerve-wracking for you. Once your attorney has explained things to you at the outset, you should feel that you are well taken care of and know that you can use your real estate lawyer as a resource any time that questions come up during the process of selling your home. Then, you can focus on that other part- packing up those boxes! (Ugh, better you than me! Have fun!)
Attorney Carol O’Connor Cadiz has been personally and successfully helping people with the legal aspect of sell their homes in suburban Chicago for over ten years. If you are thinking of selling your house or have a contract to sell your house, do not hesitate to call for a free no obligation discussion. 630 250-8813.