FAQs For Residential Real Estate
Q: Is the standard Texas Real Estate Commission Earnest Money Contract between the
Buyer and Seller just an “offer”?
- No, the Buyers are committed to buy the real estate and the Sellers are committed to sell.
- The Earnest Money Contract is not merely an offer of “price”; rather, it binds parties to
all obligations related to appraisals, inspections, repairs, survey encroachments and loan
- Buyers have majority of the risk.
- TIP: Consult an attorney before you sign the Earnest Money Contract because real estate
agents cannot give legal advice and the Earnest Money Contract is a legal document.
Q: Why hire an attorney if I have a real estate agent?
A: A real estate agent is valuable for locating properties, knowing market values, and listing a
property for sale. However, real estate agents cannot provide legal advice and that advice would
include negotiation of the legal provisions of the earnest money contracts. Additionally, real
estate agents don’t get paid unless the deal closes, so attorneys who get paid hourly, whether the
deal closes or not, are in a better position to be objective. By their nature, attorneys advise their
clients on the “what if’s” and try to minimize the clients’ risks, whether that client is a Buyer or
Seller. Hiring an attorney at the beginning of the transaction and for the closing could save a
client from litigation after the closing with its legal fees, court costs and delays.
Q: Why do we need a title company?
- To provide title searches and check outstanding liens on the property.
- Title company will not “take sides” if Seller and Buyer dispute.
- Title company is not responsible for Seller’s escrow at mortgage company.
- Title company is not responsible if ad valorem taxes increase.
- Title company is not responsible for boundary disputes.
Q: What are the “Closing Documents”?
- Loan documents to be signed by Buyers (Usually 50-100 pages).
- HUD Settlement statement indicating sales price and all deductions, credits and total
- payments to Seller and owned by Buyer.
- Title company disclaimers.
Q: Should the Buyers ask Sellers to perform repairs?
- Repairs can be the most controversial part of the transaction.
- Sellers may not perform repairs to the satisfaction of the Buyers.
- Buyers may choose to negotiate a price reduction and perform repairs themselves.
Q: What if the Sellers and Buyers have a dispute?
- All of their remedies were those stated in the Earnest Money Contract.
- Mediation is inexpensive and quick, but not-binding.
Q: Are New Home Construction Agreements different from Standard Earnest Money
- Yes, radically different.
- There are few legal requirements on residential home builders.
- Change orders should be in writing and designate costs.
- Buyer should plan for:
- a.) Time Delays (temporary housing)
- b.) Cost Overruns
- c.) Interest rate increases if the house is not completed when interim loan expires.
Q: What services does The Law Firm of Badeaux and Associates provide?
- Drafts, reviews, and negotiates Real Estate Contracts.
- Reviews Closing and Loan Documents.
- Prepares Seller Financing Documents, warranty deeds, promissory notes.
- Drafts Incorporation, LLC, and Partnership Documents if buying commercial or investment
- Drafts and negotiates Commercial Leases.