Pre-contract review is the key to saving money and limiting risk. Pre-contract review means having an attorney review the contract before you agree and are bound. Attorneys are trained to spot issues and red flags. By having an attorney analyze your contract before it is entered into and mutually agreed upon, you can save great amounts of time, risk, and money.
After a homebuyer enters into a contract to purchase with the seller, typically the buyer has executed two separate contracts, with two separate parties. The first contract likely is with the real estate agent/ broker. An example of this is an Exclusive Buyer Agency Agreement. The second contract exists between the buyer and the home seller. Each contract carries its own obligations and potential sources of risk.
A contract is a legally enforceable agreement. To have a valid contract an offer must be accepted and be supported by some sort of consideration (a bargained-for exchange).
Terminating a contract can be very challenging. It can be very costly. Lawsuits frequently arise and time is hemorrhaged.
Consider this scenario: You (the homebuyer) enter into a contract, first with a real estate agent and then with the home seller, only to decide later that you do not wish to proceed with the purchase. The real estate agent threatens to sue and so does the seller – You are now faced with lawsuits from two different sources.
A pre-contract review could have prevented this. If prior to entering into the contract with the real estate agent, an attorney had reviewed the contract then the risks and liability would have been known.
Pre-contract review prevents surprises. Conflicts can be avoided. Changes can be made. Perhaps most importantly, money can be saved - it is inexpensive to hire an attorney to review contracts prior to formation but extremely costly to defend litigation.
Buying real estate is likely one of the biggest investments of your life. Your due diligence should consist of a pre-contract review by an attorney. By having an attorney review a contract before you agree and sign, you can avoid great risk and money.