As I’ve mentioned, real estate contracts flow according to the four corners of the document. While it’s commonly the sales contract where issues arise, the truth is that other documents such as the listing agreement can also get tangled up. Understanding who the “parties to contract” are can be confusing. When it comes to a sales agreement (purchase contract), there are two parties involved: the buyer and seller.
Seems obvious, right? Consider timelines. A signed contract establishes the closing event timelines yet there are several third parties actions that need to happen in order to close. For instance, the contract establishes loan timelines which in essence give the lender deadlines for loan tasks. Remember, however, that the lender is not a party to the contract. Neither is the termite inspector, the surveyor nor the association manager responsible for timely providing appropriate documents. These vendors are not bound by the dates in the purchase agreement.
So what’s a buyer and seller to do? Relationships matter. While many think it’s the buyer or buyers agent who can push things along, a seller’s agent who has a great relationship with a lender, termite guy, surveyor, etc are actually in the best position to help. Vendors respond quickly to a busy seller’s agent. And remember, our contract gives a seller’s agent permission to speak to the lender. I’m more inclined to advise a seller to consider an offer using a lender I know and trust. After all, I can depend on what they say and are apt to advise sellers to be flexible based on me knowing their word is good. If it seems the lender is doing nothing (or worse, doesn’t know what they are doing), my advice to seller may take a different tone. The same third-party advice applies to the listing contract as well. Sellers sometimes want to insert a third party like a referring agent, a court order or even an attorney into the contract. They are not a party to the sale. The listing agreement is not the place for this. Non-listing issues are addressed elsewhere.
The confusion related to third parties in real estate agreements can become so confusing that progress stops or slows down just because buyers, sellers and agents alike often lose sight of who the parties really are but remember It’s simple when you just look to the four corners of the document!