They say that without order their is chaos. Then I guess the world of real estate is one of chaos. Or at least it feels like it at times. I have noticed a recurring theme in the real estate world that is becoming impossible to ignore: Nobody pays attention to contracts anymore!
Contracts seem to have gone from being legally binding agreements to mere pieces of paper. Have no contingencies left and decide you don’t like the deal anymore just days before closing? Just walk away from the contract. Pass your inspection contingency and decide a week later that you want to bail by fraudulently claiming that you can’t get financing? Just walk away from the contract. Decide that you want to sell your property to someone after you already have it under with someone else? Just walk away from the contract. Nobody seems to pay attention to these things anymore. Deadlines come and go and agents, lenders, buyers and sellers take no notice.
There was a time when businessmen, shady as many of them were, had a strong enough sense of follow-through that a mere handshake agreement was sufficient. Nowadays, I can have a legally binding agreement put down in writing only to have one of the parties spit on it as if it were meaningless. I don’t know if this is a sign of the world we live in today or something isolated to the world of real estate.
I am probably making the situation sound worse than it really is, but I often find myself quite frustrated during transactions. I often think we have come to this state due to the influx of unqualified or uninterested buyers that popped into the market over the last few years during the era of 100% financing and questionable appraisals. Hopefully with those days gone this trend will begin to dissipate. Hopefully.
Or maybe if more people would sue buyers or sellers that violate contracts we could curb this issue. Perhaps people are becoming emboldened due to the fact that it is very unlikely that they will face any repercussions from breaking a contract. I’m not advocating that everyone in the real estate world become sue-happy, but it’s a perfectly acceptable recourse in certain situations.
These issues probably play a role in the lack of respect shown to contracts, but in the end there is probably something less tangible at work. We all just need to remember that a contract is a contract is contract. Once you sign on the dotted line, you can’t just change your mind and walk away if there are no loopholes or contingencies. There is an endless amount of money to be made in this business if we all just learn to keep our heads. A well-written document protects the interests of all parties to our mutual benefit, but only if we can all have enough integrity to show these documents the respect they deserve.