I recently read a comment online from a consumer on another web site that got me thinking about how contracts and earnest money work differently in every state. Today I am talking about Illinois and the reason I want to get this in writing is because the writer thought there was unethical behavior-which in fact there was not. Let's answer the first question.

When Is Your Contract Secure. I am of course talking about your contract to buy a home. In the business we refer to them as Purchase Offers. Why? Well because to begin with that is what they are. So here is the process:

  1. You find a home you want to buy.
  2. Your Realtor writes up a purchase offer and you sign it.
  3. Your Realtor presents your offer to the listing agent.
  4. Listing agent presents and discusses offer with seller.
  5. Seller either rejects, accepts or counters the offer.
  6. Any negotiation concludes and terms are reached. Changes are made on the offer to reflect changes.
  7. Purchase offer goes back to listing agent.
  8. Seller signs document.
It's only at this point that your contract is secure. The contract - because that is now what it is - may still have contingencies which need to be resolved before you get the property i.e. home inspection, attorney review, finance, these are the most common.

We might like to think a verbal agreement is good enough. So what happens if another contract comes along? The listing agent is presented another contract by another agent. It is not unethical of the agent to take that offer to the seller. In fact if he does not present that offer he is breaking the law. As agents for sellers we must present all offers until the sale is closed.
 
It is possible for a new offer to trump an existing signed one but that's a complex scenario and not the point of this post.

Earnest Money. When is it due?
If you have written an offer, presented it and had it verbally accepted your earnest money is not yet due. It is due within 24 hours of a signed contract. (Business days) In other words only when the contract has been signed by all parties to the contract. Seller, buyer. Sending the money over to the listing brokerage, or anyone else, before hand does not entitle you to the property.
 
Get Your Realtor to Explain The Offer.
This is one of the things I am passionate about. Your Realtor is writing a contract which at minimum to buy a house in Northern Illinois is 12 pages long, with disclosures it'll be more like 15. We see these pieces of paper every day. We know what they look like. Therefore we should be able to explain the entire content of that until you totally understand what you are signing. We are not helping you buy a new TV, this is the biggest investment in your life to date, and deserves the time, effort and skill we have; to educate you.
 
I cringe sometimes when watching TV and the agent says just sign here, here and here. I hope that before they shoot the clip, if they truly are signing a real contract, that it is all explained to them. Seriously I do.
 
As a recap, because this was a buyer who was clearly not educated enough, it is not unethical to present another offer to a seller. It is the law to do so.

Corinne Guest

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1 Comments on Buying a Home in Northern Illinois; When Is Your Contract Secure; When To Deliver Earnest Money

DEC
11
2011
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Execellent post Corinne. It gives your consumers a step by step guide of the home-buying process as well as a good explanation when they can feel secure of their contract. Great job and thank you for sharing :)
12:06am • #1


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Corinne Rainmaker_large

Corinne Guest - Barrington & Inverness Real Estate. Equestrian and Luxury

Barrington, IL

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Managing Broker-Barrington Realty Company

Address: Barrington, Inverness, Lake Barrington, Barrington Hills, North Barrington, South Barrington, Deer Park

Cell Phone: (847) 363-3686

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