In this episode of “The Russell Real Team Minute Podcast,” Evan Russell, owner of the Russell Realty Group, explains his position on contracts, why he finds the word problematic, and how they differ from agreements.
“I personally think that the word contract is tough, I’m more fan of ‘agreement,’ because that’s really what it is, it’s an agreement to work together and if for some reason that agreement changes, then both parties are free to go.” – Evan Russell [03:07]
What You Will Learn:
[00:17] Home marketing: agreements vs. contracts
[01:31] When does an agreement turn into a contract?
[02:20] Purchase and sale agreements are contracts
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Ep. 92: I Hate the Word Contract
One word I can’t stay in the real estate industry is contract. I hate the word contract. I hate using it. I can’t take it in any fashion. When I hire agents, when I make an agreement with the seller, and that’s the word I’m going to go to, make an agreement with the buyer, every piece of paperwork that we have, that I give out, is termed as an agreement. It’s an exclusive right to sell. It’s an agreement. It’s a buyer agency agreement. Right?
Now, the purchase and sale is an agreement or that’s more of a contract. But in the marketing end of things, if we’re going to sit down together, we’re going to agree to work together, the piece of paperwork that we’re going to sign is called a listing agreement. Which means you’re going to allow the Russell Realty Group and Evan Russell to market your home for the set amount of price, for the set amount of time that we decide. If for whatever reason you decide not to sell your home, or you don’t want to sell your home anymore, it’s an agreement, you’re free to take your home off the market. You’re free to go.
A buyer agency is an agreement, which basically means if we do something together in a set amount of time that we agree together, for the set amount of price, then this will happen. If for whatever reason you don’t want that agreement anymore, the agreement gets torn up. It’s not a contract. No one is going to, at least not in my world, we’re not going to sue to enforce an agreement unless we have something in place that turns into a contract. For example, we have a listing agreement, we find somebody to buy your home, we then enter into a purchase and sale contract or a home sale contract, then that’s when the word contract makes some sense.
But initially, when agents join my team, they join an independent contractor agreement. When we list your home together, it is a listing, an exclusive right to sell listing agreement. When we choose to work together on the buyer side, it is a buyer agency agreement. Which means, we agree to work together for a set amount of time, for a set amount of terms, for a set amount of commission for whatever terms there are. And when those terms expire, we choose to no longer want to work together or agree to be teammates or partners or work together for those terms, then simply we move on to something else. That’s the premise of how the documents that we use work.
Now, don’t get me wrong. When you enter a purchase and sale agreement or an offer to purchase, those are contracts. Purchase and sales are contract. They have a specific performance, date, and time that require a seller or home buyer to do certain things to achieve the goal. But the initial agreements that we signed together, including the agents that work for me are agreements. And they are as long as we choose to honor those agreeable terms. Should the terms change, meaning do we enter into a different relationship which means a purchase and sale or a binding purchase and sale agreement or contract? Do we agree to work together with an independent contractor agreement?
As soon as we don’t want to work together in those terms the agreement goes away. We either draft a new one or we move on to something else. But a word I can’t stand is contract. Such an angry word. I personally – and this is my podcast – I personally think the term contract is tough. I’m more of a fan of agreement, because that’s really what it is, it’s an agreement to work together. And if, for some reason, that agreement changes, then both parties are free to go, in most cases.