Q. My husband and I are looking to buy a house and we recently submitted an offer, only to learn that the house was sold out from under us at a price higher than the seller was asking. I have heard that this is a recent real estate phenomenon and wanted your advice as to what we should do to protect ourselves in the future. We really wanted to buy that house.
A. You are correct that houses are moving very fast in today's crazy real estate market. I am quite concerned about this phenomenon, however. I fear that buyers and sellers alike are making hasty judgments, based on emotion, not reason.
I am concerned that buyers and sellers will wake up one morning and realize that they have made drastic mistakes. The net result will be frustration, anger and, indeed, even litigation. Annoyed or disturbed buyers will sue their lenders and the sellers, and angry sellers may file suit against their real estate broker for malpractice.
Indeed, in earlier years, when this same "mad rush" phenomenon was happening, there were many complaints filed in the courts throughout the country.
It is strongly recommended that all of us slow down a bit. Impose a short cooling off period -- even in the contract itself, or before you sign the contract -- to make sure you really want to buy or sell the house that quickly. From the seller's point of view, there is no question that this is a sellers' market. If you wait for a couple of days, no real harm will come to you. If you lose one potential buyer, I suspect you may quickly find another -- and perhaps even at a better price.
From the buyers' point of view, all too often they are rushing madly into signing the contract, and do not fully understand what the legal consequences are.
The buyer should understand that this particular house is not the only house in the Washington metropolitan area. If they miss out on one house, my experience is that tomorrow they will probably find an equally attractive property. As this column has suggested on many occasions, no home is without subsequent aggravation and headaches, which could be avoided by careful consideration before you enter into the contract.
All too often we hear of stories where a contract is signed at 1 or 2 a.m. after lengthy negotiations. Clearly, at this hour, neither the buyer, the seller nor the real estate agent is able to think clearly and carefully when a very important legal document -- namely, the sale contract -- is entered into. Both buyer and seller should include in their contract a provision that the contract is subject to review by their attorney or their financial adviser for a period of at least 48 hours. This gives both the buyer and the seller an option to reflect on the consequences of the transaction.
Contrary to popular belief, there is no three-day cooling-off period when you buy a single-family home. When you buy a condominium in the Washington metropolitan area, the buyer has certain time limits in which to review the relevant condominium documents and the budget, or the contract can be terminated.
Home buying and selling should not be conducted in an atmosphere of haste or impulse. When you buy or sell a house you are entering into a serious legal arrangement, and once your signatures are on that real estate contract, it may be too late to include other provisions or to back out of that transaction. It clearly is an exciting time for buyers and sellers -- and indeed, the entire real estate industry. However, a voice of reason and restraint must be raised, to urge everyone to slow down a bit before you enter into that significant legal transaction known as buying or selling your house.