What does it mean to review a real estate contract?
What does reviewing a contract mean?
Simply put, a real estate contract is the legal agreement between two parties (usually a seller and a buyer) that states the particulars, clauses, and terms of a real estate deal. It also contains the responsibilities and liabilities of each party involved.
This article is written with the buyer in mind, but the same principles apply to everyone, no matter what the type of transaction.
Real estate contracts outline common terms like purchase price, existing appliances and fixtures, which party is responsible for certain things during the contract, the date of closing, certain contingencies, and other financial terms. To be legally enforceable, a real estate sales contract must be in written format and should be duly signed by both parties.
Now, you must be wondering: what is a real estate contract review?
Well, reviewing a contract is the process of critically analyzing each aspect of your real estate agreement before signing it. As a buyer, it is your right to receive all information about the real estate property you are purchasing. The information is presented to you in the form of the real estate contract by the seller.
To ensure that you are getting a fair deal and the seller is delivering what they have verbally promised you, you need to go through every line of the contract.
Most people lack in-depth knowledge about the local laws of the real estate market, legal terminologies, and other aspects of a legal agreement. So, it is better to seek out various resources while reviewing the contract.
How do real estate contracts work?
While this greatly depends on the region you live in and the type of property being considered, most real estate contracts work similarly.
- Once the buyer is satisfied with a property and decides to buy it, they will submit an official offer form to the seller (or have their real estate agent do this). This offer form contains certain "must haves" to make it a valid and enforceable agreement. These include the legal names of the parties, purchase price the buyer is willing to offer, property details, amount of partial payment, closing dates, and more.
- As soon as the seller receives the initial offer, they have the option of accepting, rejecting, or countering it with an offer of their own. The counter-offer contains details about contingencies, negotiation on the purchase price, closing dates, and so on.
- As soon as both parties can agree on an offer, they are required to accept and sign it. Once that is done, the offer becomes a legally enforceable contract.
Why is it important to have your real estate contract reviewed?
When you purchase a real estate property, you will have to sign a contract. This is common knowledge. However, what most people don’t realize or sometimes ignore is the importance of getting these reviewed by an expert prior to signing.
Since every deal is unique, every contract is unique too. And you don’t want to miss the important details of your sale or purchase because you didn’t get your contract reviewed.
Reviewing a contract is one of the most important parts of a real estate property deal. Whether you are a seller or a buyer, you must understand every single word and what it means before signing your contract. If you are not doing this, you are entering into an agreement with half knowledge - and half knowledge, as everyone says, is a dangerous thing.
Buying a house (or any other real estate property) is one of the biggest investments in anyone’s life. And so, it is natural to want everything to be perfect. And the way to that perfection starts by getting your real estate documents reviewed by an expert.
Here are some reasons why reviewing a real estate contract is essential:
1. A thorough contract review helps you protect yourself from unknown risks
Reviewing your real estate contact is one of the best ways to safeguard yourself from all kinds of unknown risks.
Examining a contract will hello you understand its nitty-gritty details and give you more clarity about your responsibilities and rights. It will also tell you about the responsibilities of the seller. Being aware of this is incredibly useful in case something goes wrong with your property after signing the documents.
2. Reviewing your contact can help you negotiate in a better way
One of the least discussed benefits of contract review is how incredibly useful it is in case of negotiations. If the seller is offering you a pre-formatted contract, examining it can help you negotiate for a better deal.
In addition, if you feel that you aren’t getting a fair price, you can find ways to approach the seller for re-negotiation.
3. Contract review also helps you resolve disputes before they become problems
Disputes are extremely common in real estate deals. For example, sometimes sellers don’t disclose some critical information about the property. Other times, they may fail to fulfill the promises made to you before closing.
The key to solving such disputes is your contact. A real estate contract contains several clauses that can help you figure out your rights as a buyer. They will also help you understand the responsibility of the seller and hold them liable in case they fail to meet them properly.
Best resources for real estate contract review
Whether you are purchasing, selling, or leasing a real estate property, you are always able to get your contact reviewed by an expert. We previously covered a few of the contract review services out there, but there are several more online resources that claim to offer contract review services.
Here are some of those options to get your real estate contract reviewed:
1. ContractsCounsel: ContactsCounsel is a platform that offers various contract-related services. You can hire vetted contract lawyers, and request experts to draft or review your contract. The platform assures that their lawyers charge 60% lesser fees than law firms (unverified if this is accurate)..
2. LegalSifter: LegalSifter is another contract review platform that you can use to get your real estate contracts reviewed. The goal of LegalSifter is to pair you with an attorney, similar to ContractsCounsel. LegalSifter claims to use a combination of Artificial and Human Intelligence to review contracts and give valuable advice to their clients.
LegalSifter claims their self-service AI-powered algorithms can review your contract, which comes with a $28/month subscription. You can also pay $227/month to gain access to full contract reviews similar to what you could expect from a Level On Demand expert. It is unclear how long each review takes but the required minimum term is 4 years! That cost comes out to over $10,000.00 dollars!
3. BizCounsel: Just like LegalShifter, BizCounsel also leverages the power of advanced technology to help their clients in legal matters. The platform isn't just limited to contract reviews but offers a large variety of legal services both for individuals as well as businesses. They have three membership options: Starter, Core, and General Counsel. At their $1,548.00 per year required annual subscription, the Starter option is the most economical, but it offers limited services.
So, these were some of the top resources that you'll find when you search online to get your real estate contract reviewed at an affordable price.
Perhaps one of the resources we just covered may be a good fit for you. Level On Demand offers a better contract review service. Our contract reviews are more affordable than using a software to get matched to a high-priced attorney. Most importantly, our reviews are typically completed and returned to you in under 24 hours. This is not what you get with those other services.
Whether you are a real estate agent, seller, or buyer, having the helpful second opinion of an expert is essential to making real estate decisions and understanding contracts before your sign them. If you don't want to hire an independent real estate attorney and want a more cost-effective option, going for a contract review platform like the ones mentioned above can be an excellent choice.