Wednesday, November 21, 2007

The Importance of Details

Real estate is a business of details. From contracts to disclosures to listings to marketing plans, detail is everything. Every paragraph, phrase, and word holds specific meaning and must be used with care to accurately convey meaning to other participants in the transaction.

What you say and don't say can cost you money...big money. And don't think for a second that the other parties in the transaction will not take advantage of an unfortunate oversight. It happens during negotiations and at the closing table every day; one party's intent, while sound and fair, is not adequately defined in a contract and the other party is able to win concessions.

Let me give you a specific example: Let's say you have some evidence of water damage from a past roof leak on your ceiling. The roof leak has been correctly repaired by a reputable company with sufficient documentation, but the buyers request that the ceiling itself be repaired. You agree to this repair and an addendum is added to the sales and purchase contract that states precisely... "Seller to repair water damage to ceiling in living room".

What exactly did you just agree to repair? Did you agree to repair any mold damage or evidence behind the drywall? Did you agree to use the same quality materials, or a reputable company to make the repair? Did you agree to paint the ceiling after the repair?

See where this is going? The repair request lacked detail and clarity, and is now open to interpretation. This being an example from the real world, I will tell you the seller interpreted the request to mean "repair the ceiling using a reputable company with similar materials, but a repaint is not required". Of course the buyers thought it was understood the ceiling would be repainted.

After a battle at the closing table over the meaning of the addendum, the buyers had to accept the repair as-is and the seller had to make no further corrections. Unfortunately for the buyers, their real estate agent allowed a poorly written addendum to develop into a serious point of contention that threatened to destroy the deal.

Keep in mind the importance of details when you are working with real estate, and make sure you are working with competent representation. If two people cannot read the same verbiage and come to the exact same conclusion, the wording is insufficient. Make sure you review your choice of wording in detail and if you are in doubt, seek the advice of an attorney. It can be pretty painful in the wallet should you make a mistake. I am always available through my website, Louisville, Kentucky Homes, to answer all of your real estate questions.

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