The spring home buying season is in full bloom and that means real estate contracts are flying everywhere. When you sell your home, you should always remember you’re entering into a legally binding contract with a buyer. That’s why it’s vital you prepare AHEAD of the sale. We’d like to help you understand such things as important dates in a contract and some contract pitfalls to avoid.  It’s important to note that this advice is specific to the state of Colorado real estate contracts, but I’m sure it’s similar in other states as well.

Before an offer to purchase your home becomes “binding” on you and the buyer, two important dates occur first:

  • The date the offer is signed by the buyer for presentation to the home seller.
  • The date the offer is valid for the seller to respond in writing.

An example: a contract may state the “offer is presented on October 9 and is valid until 6:00 p.m. October 11.”

Potential Pitfall: Pay close attention to these dates. If you ignore the “valid until” date and time, the buyer’s offer is automatically withdrawn. This is especially tricky when our clients receive multiple offers.

The clock starts ticking with the effective date or binding contract date, when all parties have signed the offer and there are no more changes to be made to the agreement. The binding date starts deadlines to complete tasks outlined in the accepted offer. These tasks include property inspections, review of existing survey, ordering a new survey, legal document review, mortgage approval and funding, if applicable. Earnest money from the buyer may accompany the offer or collected within a certain time after the binding contract date.

Potential Pitfall: It’s easy to confuse the “offer date” with the “binding contract date,” which can be several days AFTER the offer came in. This can be a crucial point for the due diligence period, when the buyer has a certain number of days from the “binding contract date” to have your home inspected, change their mind, etc. Make sure you’re counting the right days.

Usual Dates in an Offer to Purchase:

  • Date offer is made.
  • Date offer expires.
  • Effective or binding date of offer when accepted.
  • Dates for closing, or formalization of the offer.
  • Date to pay earnest money.
  • Date to receive documents requested for review.
  • Dates for a due diligence period.
  • Date to order inspection, survey.
  • Deadline for review of all contingencies.
  • Date for closing or formalization of the contract.
  • Date for disbursement letter, signed by buyer and seller, to be sent to the escrow holder to release funds.

If any date or deadline can’t be met, extensions in writing must be drafted and signed by buyer and seller in order to keep the real estate contract valid and in force.

Potential Pitfall: If you can’t meet a deadline that’s part of the contract, verbally letting someone know (or ignoring it) won’t work. All contracts and terms are valid ONLY if they’re in writing. And a both parties should legally assume ALL deadlines will be met unless both parties are notified otherwise in writing. GET IT IN WRITING.

Please know Carol and I aren’t attorneys. This article is based on publicly available legal opinion, current practices in real estate and our own experiences with Colorado real estate contracts in the Western Slope real estate market.

If you’re considering selling your home you need an agent who understands the purchase contract and the various terms and conditions which affect you. We have that experience and knowledge to help you make a more informed decision about the offer contract. Call us today to learn more about selling a home in the Western Slope Colorado area, or the process of a real estate transaction in general!