A contract management system for commercial real estate
Just as with residential real estate contracts, two of the most common real estate contracts are purchase agreements and listing agreements.
Purchase agreements are the contracts between the sales contract between the buyer and the seller. They contain many terms that need to be precise such as the property description, terms of sale including the purchase price, down payment and buyer’s financing arrangements, form of deposit and details about how the transfer of possession is to take place. In commercial real estate purchase agreements are more complex containing more unique terms than in residential real estate. This is because commercial entities have more varied needs. For example, a certain business may require access to a certain type of electric power or amount of parking while another requires specific zoning.
An agency at any one time may have hundreds of these purchase agreements that they are negotiating and monitoring, each with different terms, conditions and critical milestones occurring on different dates.
Listing agreements are those agreements between the seller and the broker and there are several different types such as an open or exclusive listing. An open listing is where a seller gives the listing to as many brokers as he or she chooses. In this case a broker earns commission only if he or she is primarily responsible for bringing about sale of the property. On the other hand, an exclusive listing is where a seller signs a listing agreement with only one broker. One agency may have multiple live listing agreements for the same client at any one time for various properties. These agreements may all be different types and have different conditions.
So what is the best way to keep all these contracts straight?
It is essential that the following be done:
- Take a systematic approach to organizing your documents. This includes you having easy access to them. If a bidder calls you up, you don’t want to sift through wads of paper for twenty minutes before you can tell them whether the offer will be acceptable or not to the seller.
- If you are managing multiple properties for the one client, make sure these files are separated and mark them in some way to remind yourself of the distinctions.
- Ensure your client has access to all relevant documents so if any issue arises in them, you can discuss these with them without having to be in the same location as them. Also make sure all important clauses in these contracts are highlighted in some way so your client can readily find these sections.
- Log all milestone dates and have a system that reminds and prompts you to complete commitments at appropriate times.
- Ensure all alterations to standard term contracts or negotiations in relation to a particular clause of a contract are properly documented and where possible conversations about negotiated terms are recorded. This is to ensure that confusion or disputes that may occur in the future can be swiftly and appropriately resolved.
In today’s fast paced society, it is also helpful to have a tool that allows you to communicate on and negotiate agreements via the cloud. There are contract management software programs that allow you to negotiate in real time on documents without having to use email and keeps all your discussion in the one place.
ContractRoom is one such software system. It can assist with all of the above essential items.
What are your thoughts, tips and tricks for keeping your real estate contracts straight? We would love to hear from you!
ContractRoom, home of #HappyContracting – making the world more agreeable one happy contract at a time. “Negotiate less, Agree More”!