“Looks like we found the right property,” a real estate agent said after he and his client viewed a 32-unit apartment building. “You like the property, don’t you?”
The buyer nodded her head in agreement.
The agent reached into his briefcase and pulled out the paperwork. “I’ve got the Purchase and Sale Agreement all done. All I need you to do is initial a few spots and sign the back page.”
The buyer did, and in less than five minutes, the offer was signed.
That’s usually how a Purchase and Sale Agreement (PSA) begins. You write an offer, the seller accepts or counters and eventually, hopefully, you have mutual acceptance. But signing the agreement prematurely is all too common.
At first glance the offer means little because if the seller has even a hint of common sense and negotiating skills, they’ll counter it anyway. But what if they don’t? What if they accept the offer as it’s written? What if there’s something about it that the seller or agent didn’t want you to know? This is one of the most important documents you’ll ever sign, yet most investors have no idea what it says or means.
Remember the good old days when a man’s word was his bond? Remember when you could shake hands and know-that when it was all said and done-everyone would be happy? You probably don’t and I don’t either.