Is there a legally binding document that buyers should ask sellers to sign when sellers "accept" an offer?

Asked by Jane Rayburn, New York, NY Sun Nov 1, 2009

I'm a home buyer in New York state, and I've made a written offer that was verbally accepted by the seller. I went ahead with the inspection and met with my attorney, but 1 day later the seller received a higher offer from another buyer and verbally "un-accepted" my offer. Should I be asking for a signed document that can "lock in" a seller's acceptance of an offer? Or is nothing legally enforceable until the contract is signed?

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Tammy Benkwi…, Agent, Somers, NY
Thu Nov 19, 2009
" I have found tha agents don't necessarily "do the right thing" by getting the offer in writing and requiring the seller to accept in writing. "

Dianne, respectfully, offers are not contracts.

It is (I am sure I will get a ton of flack for this one) not necessary to sign an OFFER. Of course, a CONTRACT must be signed. My companys' offer to purchase form in fact actually reads in bold letters at the top of the page "This is NOT a Contract".

Very often buyers will go home, consider their options, and call me with their offer. I will type it up, have them review it via email to confirm that I am submitting the correct offer to cover my "you know what" . :) I do not require them to sign it because....they are not entering into a legally binding contract.

When I represent sellers, once in a rare while, the agent presenting the buyer will half-heartedly ask my seller to sign a purchase offer that has some language in it that seems to "bind" them. I advise my seller clients to speak with their attorney and let him or her advise whether or not to sign. (To date, no attorney has to my knowledge advised my client to sign an offer.)

Look, Diane if it's working for you great. If you received a different legal interpretation thats fine of course. But Jane indicates she is a home buyer in "New York State" (not necessarily NYC.) Agents aren't necessarily doing the wrong thing by not having a buyer or seller sign an offer.

The only exception I can think of may be in the case of a short sale or foreclosure. But thats another animal altogether which I think we all recognize.
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Tony Lara, , New York, NY
Wed Nov 18, 2009
I agree with the responses, the only document that is legally binding is the contact that is signed by both the seller & buyer making it a fully executed contract. You'll sign it with your attorney, submit the downpayment deposit and that'll prevent any bidding wars etc..good luck.
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Anna M Brocco, Agent, Williston Park, NY
Wed Nov 18, 2009
A contract is the only document that is binding providing it is with the seller's attorney along with your deposit check. When you find a property that you absolutely must have, time becomes of the essence--therefore, do that inspection right away and sign the contract on the same day if possible; bidding wars do exist, so it advisable not to make small issues into big issues especially after the inspection which will cause further delays.
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Kent Miller, Agent, Garden City, NY
Wed Nov 18, 2009
sorry to hear, but there is NO legally binder document binding the 2 parties. only a fully executed contract will be able to "lock you in" and even that has its loop holes
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Dianne, , New York, NY
Tue Nov 3, 2009
I absolutely agree that upstate uses broker prepared contracts, however, her "address" is New York, NY which leads me to believe she is probably in Manhatten but possibly in the other boros which led to my answer. As you state, we don't have broker prepared contracts but we certainly do use binders. The problem is that in the over 40 years of my real estate experience both as owner broker of offices and in the education field, I have found tha agents don't necessarily "do the right thing" by getting the offer in writing and requiring the seller to accept in writing. I really wish we did have broker prepared contracts, it would eliminate the problem Jane had.
Dianne Stromfeld
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Tammy Benkwi…, Agent, Somers, NY
Tue Nov 3, 2009
Dianne:

I practice in the Hudson River Valley and in my 18 years working in Westchester, Putnam, and Dutchess counties, I have never taken a "binder" as you suggest nor do most other agents in these areas. In my experience, a "binder" isn't as binding as one would think.

Upstate agents will actually complete a contract that has an attorney approval clause, filling in the blanks and then having buyer and seller sign. It is better protection for the buyer in this case. But this is not done downstate and it is acknowledged in the NYS Salesperson licensing course (Chapter 4 part III). I am assuming since there was no contract or "binder" , Jane is purchasing in a region that does not practice real estate this way.

-Tammy
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Dianne, , New York, NY
Tue Nov 3, 2009
Sorry, but I have to disagree with most of the answers regarding getting some protection between accepted offer and contract. Haven't these agents heard about a binder? The buyer puts the terms of the offer in writing including contingencies such as financing a home inspection, etc.. This is accompanied by an earnest money deposit check made payable to the seller or his attorney. When the seller accepts the binder its terms become the foundation for a more formal contract with the terms already agreed upon. Too many agents make an offer to the seller and don't insist on anything in writing. A well educated agent can explain to the seller that unless there is an agreement in writing neither party is bound by a verbal agreement. If this is calmly and explicitly explained to both parties, there is a realization that either party can back out and there really is no deal. Agents are too quick to get a verbal yes and don't realize they have nothing to fall back on. Another issue is that if there is a signed binder and the seller backs out they might be responsible to pay the first broker his commission. Jane, the next time you find a house you like make sure to make the offer in writing, give a good faith deposit and don't rely on a verbal "you bought a house"......you haven't unless it is in writing.
Dianne Stromfeld
Education Director
Realty Institute
http://www.realtyinstitute.net
0 votes
Tammy Benkwi…, Agent, Somers, NY
Sun Nov 1, 2009
Make sure you provide the seller a copy through your attorney of the home inspectors report that shows the house has termites. When a seller is AWARE of a material defect, the MUST disclose it to any new buyers regardless of whether or not they complete the property disclosure form.

Let's see if the new buyers are still interested after they are aware of the problems.

The sellers may come back to you indeed.
0 votes
J R, , New York, NY
Sun Nov 1, 2009
You moved quickly on the inspection. The homeowner must remedy the pest problem. Was this home "as is". If so, and the second buyer was willing to overlook the structural repairs, then you would be out of luck.

We continue to show homes until contracts are signed unless the homeowner says not to continue. We do not have to inform the buyer whose offer was accepted that the home is going to be shown, although the agent should have explained that to you. You should have been given an opportunity to come up to whatever the second buyer offers. If, on the other hand, the second buyer was all cash, as is, no contingencies, unless you are able to meet those terms you'd still be out of luck.

I always tell homeowners to keep the second as a back up offer. Dumping buyer #1 does not turn buyer #1 into a back up, it turns them completely off and they go away mad, then if something goes wrong with buyer #2 you have nothing.
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Jane Rayburn, Home Buyer, New York, NY
Sun Nov 1, 2009
Thanks very much for your replies.

Our offer was accepted last Monday, and we had the inspection on Wednesday evening. The inspection found termite damage with possible structural defects, as well as a dangerous electrical situation (corroded, exposed wires) that need repair.

In the meantime, the real estate agency was still showing the house, without telling us. This was after the seller's agent told us on Monday, "Congratulations -- you have the house!"

I wanted to try to get an estimate of how much any repairs would cost before proceeding. Is that a mistake? I'm not a carpenter, and I wanted to know if I was going to be stuck with a $1,000 repair bill, or $20,000.

I met with my attorney yesterday, and he said he would speak with the buyer's attorney tomorrow to try to negotiate credits at closing.

Today the seller's agent told us that another party toured the house on Thursday and outbid us. Less than 12 hours after our inspection, they had given up on us as buyers, I guess.
0 votes
J R, , New York, NY
Sun Nov 1, 2009
Untill there are fully executed contracts the seller can go with whomever they choose. Buyers don't like to hear that, they want to take their time with inspections, renegotiations etc, but untill the seller signs they can change their mind. I make this plain to every new buyer I get, the first time I meet them. I have had situations where a buyer such as yourself gets (rightly so) angry but places the blame on me and stopped working with me. This is how it is: if you want to be sure to get the house, have your inspection the day after your offer is accepted and don't try to renegotiate the price after wards. Better yet, before you make your offer visit the home with someone who is in construction and go over it yourself with a fine tooth comb, and waive the results of the inspection as long as there aren't structural defects or problems with the heat or electric. If you love the house, assume someone else would love it too.
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Carmen Di Bi…, Agent, Nyack, NY
Sun Nov 1, 2009
Jane,

As Barbara said, nothing is enforceable until a fully executed contract of sale with an earnest money deposit is in the hands of both parties. You said the seller " verbally "un-accepted" my offer.", which implies that you were aware that there was another offer. Did you choose to give up at that point?

With future accepted purchase offers, ask for right of first refusal. While this does not mean you will automatically get the house, it will keep you in the negotiations.
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Barbara Klep…, Agent, Babylon, NY
Sun Nov 1, 2009
Nothing is leglly enforced until contract is signed but seller should have given you an opportunity to come up on your offer before accepting another.
Web Reference:  http://www.lihomechoices.com
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