The new year brings important updates to the standard real estate contract, which will go into effect on February 1st.
These revisions introduce significant changes designed to improve clarity and efficiency in real estate transactions.
Familiarizing yourself with these updates will position you to best guide your clients.
Clarifying the “As Is” Condition
One of the most notable changes is the way the contract addresses properties sold “as is.”
In the past, the “as is” designation often caused confusion and frustration. While sellers would list properties as “as is,” buyers frequently used the attorney review period to negotiate repair credits, undermining the terms of the agreement.
This created challenges for brokers who had negotiated “as is” offers, only to see them renegotiated later.
The revised contract seeks to eliminate this issue by providing three distinct inspection options for buyers:
- Waiver of the right to inspection (with no requests)
- Right to inspect with the right to make requests
- Right to inspect with a waiver of the right to make requests
If buyers choose the “no requests” option, the “as is” nature of the sale is preserved, preventing renegotiations during the attorney review period. This structure allows buyers to align their approach with their level of comfort and risk tolerance, while maintaining clarity for sellers.
There is, of course, no guarantee that the buyer won’t impose on the attorney to make requests notwithstanding the fact that they stated they would make none, but it at least sets the stage for the negotiations that both sides are starting from.
Disclosure of how the Buyer’s Broker will be Compensated
The terms for payment of the buyer’s broker’s commission is set forth on the first page so that the costs to the seller are clearly set out.
A More Modular Contract Structure
Another important update is the contract’s streamlined structure.
Instead of lengthening the main document, the drafters have added more optional addenda. These addenda address specific issues that may only apply to certain transactions, reducing the need for brokers to sift through unnecessary details.
This modular approach makes the contract more concise and user-friendly while affirming flexibility for diverse transaction scenarios.
The personal property list has been moved to the second page and updated to reflect items that are now more commonplace in real estate transactions. For instance, the buyer will now know if they are getting a video doorbell or may not have any doorbell when he moves in.
Benefits for Brokers and Clients
The changes seek to simplify the contract process, clarify terms, and facilitate quicker closings.
By addressing “as is” conditions more effectively and introducing a modular structure, the revised contract reduces the likelihood of drawn-out negotiations and misunderstandings. These improvements benefit everyone involved—buyers, sellers, and brokers—by creating a smoother transaction experience.
Preparing for the Transition
To fully understand and adapt to these updates, brokers should prioritize continuing education through courses offered by industry associations or legal experts. Staying informed will empower brokers to set clear expectations with clients and address potential concerns proactively.
Open Communication is Key
As the new contract takes effect, open communication between brokers, attorneys, and clients will be crucial.
By addressing questions and concerns early, brokers can create a seamless process for all parties. While it may take time to adjust, the revisions ultimately promise greater efficiency and predictability in real estate transactions.
The Minchella & Associates Difference
With over 40 years of experience in Illinois real estate law, Erica Minchella has represented thousands of home sellers and buyers, landlords, and commercial and investment property owners. For more information, schedule a consultation today.
