[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]
As a former corporate lawyer, no one is more fastidious about “dotting i’s” and “”crossing t’s” in Purchase Agreements.
And yet, I intentionally don’t number the pages in Purchase Agreements I draft for Buyers (as a listing agent, you receive a PA, or offer, drafted by the other party).
Because the last (and most important) documents — the Counteroffer and any Amendments — should go on top.
If I numbered Purchase Agreements, I’d have to re-number them over and over again.
Logic for Real Estate Conventions
So, why not just add successive changes to the bottom of the Purchase Agreement, as many Realtors do?
Because they’re too easy to miss that way.
In particular, appraisers and closers handling many files simultaneously see page 1 of the Purchase Agreement, note the Purchase Price, earnest money, and closing date, and move on to the next file.
Thirty-seven pages later, all three terms have been changed — and new ones added!
First Out On Top
Which is why ordering PA doc’s in reverse chronological order — at least once the initial PA and Addenda are signed — makes the most sense (within the PA, the hierarchy is by importance).
My preferred order:
1. Purchase Agreement Addendum (General): usually resolving any inspection issues and removing the Buyer’s Inspection Addendum (#5, below);
2. Counter-Offer Addendum: capturing any negotiated changes to the Buyer’s offer, leading to an accepted deal;
3. Purchase Agreement;
4. Financing Addendum;
5. Inspection Addendum;
6. Arbitration Addendum;
7. Personal Property Addendum;
8. Seller’s Disclosure;
9. Lead-Based Paint Addendum (if applicable);
10. Misc. (if applicable): Condo doc’s; Well Disclosure; Septic Disclosure; “As Is” Addendum; City Certificate of Compliance/Occupancy
Of course, the way residential real estate works, at least half the time I’m the listing agent, representing the Seller (in fact, it’s typical for veteran agents’ practices to skew towards representing Sellers — it’s more lucrative).
When I’m receiving a PA drafted by another Realtor — especially when that’s the case — I’ll reassemble the PA and Addenda in my preferred order (above), because I know that that’s what the Appraiser is going to receive from the Buyer’s lender, who got it that way from the Buyer’s agent . . . who got it from me (got all that??).
P.S.: And exactly how is it that Minnesota Realtors can practice law without a license — which they clearly do, every day?
Speaking of which: please note that I am licensed in Minnesota; if you are buying and selling real estate anywhere else . . . caveat venditor.
*My alternate title for this post: ‘Why It’s Better to Offer Than to Receive (at Least in Real Estate Contracts).”