With mortgage interest rates low and lots of homes for sale it is a buyer’s market. Many buyers are swept away in the excitement of selecting a home, and are ignorant of the problems that can result from making a hasty decision concerning the first and most important step on the path to acquiring their dream home – the Offer to Purchase. The Offer to Purchase is a detailed written contract between buyer and seller.
In Wisconsin a contract to buy a home is not legally binding unless it is in writing, signed by the buyers, accepted by the sellers, and contains all of the essential terms of the transaction. In almost all cases, this legally binding contract takes the form of a standard residential Offer to Purchase (WB-11 Residential Offer to Purchase). This 9 page 462 line form is filled with legalese. Additional real estate forms are often attached to the Offer and become part of the contract.
More often than not, the new home buyer is working with a real estate agent. Successful realtors are personable, friendly, and anxious to help the buyer make a decision about their dream home. For many buyers, they look upon this helpful person as working for them. Almost always, the realtor isn’t working for the buyer – he or she is working for the seller. The realtor’s fee is dependent on getting the Offer to Purchase signed by the buyer and seller in order to start the legal process which will (hopefully) end up with a closing of the transaction. The realtor makes money by earning a commission which is paid upon closing.
Realtors perform an important service in marketing homes, connecting the buyer and seller, and helping arrange for a real estate transaction to be completed. However, buyers must bear in mind that the agent’s ultimate objective is to close the transaction so he or she can collect a commission. When assisting a potential buyer with the preparation of the key legal document in any transaction – the Offer to Purchase – the real estate agent has a strong incentive to minimize potential problems which can sometimes lead to unhappy results including lawsuits.
The right time for the buyer to get independent legal advice concerning what the Offer to Purchase should include is before the blanks are filled in and the seller has accepted the Offer to Purchase. After the buyer has submitted a signed Offer to Purchase and it has been accepted by the seller, it is difficult or impossible to get out of the legal obligations created by the contract. A buyer’s refusal to close a transaction can result in claims for substantial damages for breach.
You want to meet with your lawyer before you have signed the contract and cemented your legal obligation to purchase the house. Your attorney can advise you as to what needs to be part of the contract to protect yourself from problems that may cause the transaction to go sour and, in some cases, result in costly claims against you.
Avoid the mistake of thinking that the realtor is working for you. When you get to the point of wanting to make an Offer to Purchase, it is time to take a step back, get good independent legal advice, and then have the benefit of a carefully drafted legally enforceable contract prepared by a person who is working to protect your interests and to reach your objectives – your attorney.