(Much of this material is taken from our previous blog on why Buyers should negotiate even standard contracts. To see that post, click here. The material here has been modified to apply more to Sellers and fit our title.)
We call this “Just Sign Here Syndrome”.
First, let’s define our terms.
According to dictionary.com, “Standard” has the following definitions:
- something considered by an authority or by general consent as a basis of comparison; an approved model.
2. an object that is regarded as the usual or most common size or form of its kind.
3. a rule or principle that is used as a basis for judgment.
Now let’s consider which of these definitions applies to real estate transactions:
- To use this definition, we would need to agree either that (a) the “standard” contract documents have been deemed so by some authority; (b) or that they have been deemed so by general consent.
- To use this definition, we would need to accept that the “standard” contract documents in any particular jurisdiction are the most common ones used there, for whatever reason.
- This definition does not seem to apply to our situation.
So that leaves us with 3 options:
A. Deemed “standard” by some authority
B. Deemed “standard” by general consent
C. Most commonly used
We believe that only “C” really applies to most “standard” real estate documents we see. If that’s the case, the mere fact that they are commonly used does not mean that they are better or that they are good at all, since being commonly used is not a commentary on the value of the documents. Now we accept that since they are the most common, the marketplace is used to them and so, for that reason, it doesn’t make sense to rock the boat too much in dealing with these documents, but that is a far cry from viewing these documents as some sort of golden standard, or even as some sort of fair compromise between buyers and sellers, neither of whom had any say in the formation of these documents. If you, as a Seller, had your own attorney, you would surely want to change a number of things in most “standard” contracts.
“B” cannot apply since it was not “We the People”, nor any appreciable subset of us, that had any say in the formation of the “standard” documents, nor was it our duly elected officials, nor, in the vast majority of cases, is there any oversight or continuing involvement of a Bar Association as an act of public service or consumer protection.
“A” cannot apply because, generally as we understand it, real estate salespeople (agents and brokers) have organizations that have their attorneys draft the documents.
If the salespeople are the clients for whom the documents are drafted and revised, then they will, first and foremost, protect the salespeople. That is why at some of these so-called “standard” documents may insulate the agents and brokers from liability in the cases of incorrect measurements, undisclosed defects, faulty repairs, and some even allow the agents or brokers to get paid something if the deal does NOT close, usually to the great surprise of their clients. That means that a Seller may have a number of things they might want to change in a “standard” contract. In addition, every situation is different and language that might make sense under one set of circumstances might not make sense when, for example, your travel schedule or new job you are starting or other personal matters get in the way, adding more stress to an already stressful move.
If one is acting as the “Authority” then they are acting objectively, not subjectively for your own benefit or the benefit of your own members.
So if the “standard” contracts are really just the ones commonly in use, that means we should use them as a general guideline, since they have worked at least to some extent, but nothing more.
We should negotiate, wherever appropriate, to protect our own interests as Sellers. Finally, we should be very skeptical each time these so-called “standard” contract documents are modified, since there is no public input into this process and since such modifications are being done on behalf of the organization of salespeople, who have a vested interest not in your protection, but in making sales. We should definitely consider outsourcing sales to salespeople, but we should be careful since, when we outsource contractual protection to them as well, we do so at our own risk.
In our next blog post, we plan to explore, “Not Reading the Contract at All!” (#8 of the 15 Mistakes We See Home Sellers Make Most Often). We hope you find the information helpful.
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