Definition of One Time Showing Contract
A one time showing contract for the purpose of showing property, is a contract that is only in place for one showing between a potential buyer and a seller or potential tenant and landlord. A one time showing contract is sometimes preferred by sellers of real property because they are not forced into a buyer/tenant relationship, but are merely allowing the potential buyer or tenant to view the property for the one time. This may be important if the seller fears property damage or theft as a result of allowing strangers into their home or commercial property.
Once the contract is signed, which may be indicative of the price , terms and conditions of the sale of the property, the parties may schedule a specific date and time to show the property to the potential buyer or tenant.
The absence of consideration is the reason why a one time showing must typically be in writing to be enforceable.
Whether it is the sale of real property or the leasing of real property, the one time showing contract is usually formed before the contract of sale is executed after the potential buyer has viewed the property. At this point, the potential buyer may seek financing from a lender, and they will most likely get an appraisal, and a home inspection on the property, just to name a few.
Essential Components of a One Time Showing Contract
A one time showing contract is an important legal document. It provides abundant information about the contract you will be signing. Parties to the contract should pay special attention to the following details:
Parties involved: Identify parties by full name and the title associated with the role they will perform in the contract. Often, that title is real estate agent. However, it may be owning partners in a limited liability company or managing members of a company that has stockholder investors.
Terms of contract: Precise terms of the contract include dates for lots, such as the closing date, the date the broker earns commission and when the broker may return advertised material.
Conditions: Conditions are clearly explained within the contract. They are the items or issues that would cause the contract to become void. If any party does not satisfy the conditions to the contract, that party has not performed under the terms of the contract.
Advantages of One Time Showing Contract
In addition to preventing showings from being accessible to anyone without prior approval, there are other benefits to utilizing a one time showing contract. For realtors, especially those dealing with a high volume of listings, this contract can save an agent’s time by allowing them to vet potential buyers before meeting on property. Agents have little to no exposure to the general public, so allowing an open showing could result in a deluge of prospective buyers who may not be earnest. By utilizing a one time showing contract, an agent can potentially weed out those who are not serious or who may have ulterior motives for scheduling a showing, such as seeking out a layout they can mimic to subsequently break into the owner’s home.
This type of contract also provides the property owner with some much needed peace of mind. Allowing anyone to visit your home is in and of itself a risky decision. When seeking sales or rentals, there are always unscrupulous persons that will attempt to make an appointment with the intention of looting the home or harming the occupants or owner. While it is impossible to vet every potential buyer or tenant, utilizing a one time showing contract helps the owner feel secure in knowing that prospective buyers have been vetted somewhat prior to entering their home.
There are some situations where utilizing a one time showing contract is exceptionally beneficial. For example, if you are going through a divorce and do not want your spouse or their family to bring a potential buyer back into the home.
How to Prepare a One Time Showing Contract
When most agents consider drafting a one time showing contract, they simply whip out a program or grab a form from the local realtor’s association. The reality is that this is a major mistake. Like most contracts, one time showing contracts should be drafted with a bit of care and attention to detail.
First, the showing agent should consider whether the listing agent (and/or broker) should receive commission. In my opinion, there is no harm in paying commission to the listing agent (at a rate lower than that offered by the listing agent to cooperating brokers under the listing agreements). This shows goodwill and is considered uncommonly courteous within the industry. Additionally, when the listing agent receives a commission, she will likely refer more showings to you; two agencies actively working together to sell a property is better than one agency that may feel resentful of others success. In almost all cases, I include a clause providing for the payment of commission to the listing agent. Whatever you do, however, always use a nominal fee (usually 15 dollars) to offset the cost of preparation and to ensure that consideration exists for the creation of the contract.
Second, be sure to include an adequate liability limitation clause. This is particularly important in one time buyer showing contracts as an agent’s duty of care arises from his contractual obligations and he must provide a contractually sufficient level of service under Virginia law. Many (if not most) real estate contracts can be subject to large damages claims. For example, a buyer who loses $25,000 on a $100,000 investment because the agent failed to disclose material defects (or neglected to order inspections when the buyer had concerns about the property) would have a damages claim nearly equal to the value of the home. As such, if the commission on the investment was $1,000, the contract should contain a liability limitation clause listing only the amount of the commission (or less).
Third, be sure to include a clause requiring the customer to indemnify the agent for any actions taken by the customer in connection with the property. By indemnifying the agent, the customer bears responsibility for claims that arise directly from their actions.
Finally, ensure that the contract contains any clauses that are generally found in real estate contracts in Virginia. For example, a clause setting forth the amount of earnest money required, the statutory requirements for disclosing lead based paint, a time of essence clause, and an attorney’s fees clause are all common throughout Virginia. In addition, if the property was built prior to January 1, 1978, the EPA has issued a very useful pamphlet listing potential risks associated with lead based paint housing. This pamphlet must be disclosed to buyers, and should be included as part of the terms of the contract. More information is available on EPA’s website.
Diligence in drafting a one time showing contract is critical to the prevention of liability down the road. Don’t be penny wise and pound foolish; invest the time and effort into drafting a quality contract!
Legal Aspects and Common Errors
While the advantages of utilizing one time showing contracts can be compelling, there are several legal pitfalls and common mistakes that should be avoided to ensure that the contract is held up in case of a dispute.
A titling or misinterpretation in a real estate contract can easily be resolved by referring to Illinois statutes or case law. While the contracting parties have the latitude of combining multiple duties into one contract, it is best practice to use one contract for each duty (i.e., property management, rent collection, security deposit refunds, maintenance, and utilities, etc.). By creating separate contracts, the contracting parties can avoid cumbersome and complicated issues that may arise when one person claims that another person owes him or her money. This goes hand in hand with avoiding ambiguous terms and provisions. A best practice is to draft contracts using specific terminology with well-defined terms. An equally important practice is to include the parties full names . If you are dealing with individuals, always include the middle name. On occasion, parties will provide their initials only or abbreviate their middle name. Even if it appears obvious who the parties are, that isn’t sufficient in a court of law.
Parties to a contract should also avoid the temptation of creating a contract that doesn’t address legislative changes and judicial decisions. Parties should also consider adding a severability clause to the contract. This allows a court to remove invalid terms as necessary to preserve the contract. Many times people stop thinking about a contract once the signing ceremony takes place, but a good contract will contemplate future disputes and carve out a solution to such disputes. Finally, good contracts will have a choice of law and governing law to protect the parties in the event of a conflict between states. Therefore, the drafting of good contracts will go a long way in supporting your claims in case of a dispute.
One Time Showing Contract Compared to Other Real Estate Contracts
When reviewing the various types of real estate contracts, it is prudent to explore how the different forms of contracts compare to each other. For instance, compare the obligations contained in a one time showing contract with those in an exclusive agency or listing agreement. Exempt from both rules and regulations of the deposit and fidelity fund, a one time showing contract is a very simple agreement, creating a one-time contractual relationship with the broker. In contrast, an exclusive listing agreement creates an obligation to allow a broker to market property for a longer period of time, usually 1-3 months. An exclusive listing agreement differs from a one time showing contract in that there are more protections for the consumer within an exclusive listing agreement. All closing costs and commission obligations are finalized and delivered at the end of the selling process when a property has sold or the exclusive agreement terminates. This is not the case with a one time showing contract.
One Time Showing Contract Negotiation Strategies
Although the purpose of the One Time Showing Agreement is unique (i.e. the authorized agent/ broker visiting with the unrepresented seller to preform a market analysis of the unrepresented seller’s home), that does not mean that the terms of the contract cannot or should not be negotiated to fit the needs of the parties involved.
One method that is often overlooked by the brokers is using a checklist. For example, the broker should fill out his or her part of the checklist out and send it to the unrepresented seller to fill out the remaining portions. Then, the broker and the seller can go back and forth with the checklist (and even make comments on the checklist) to negotiate any issues and concerns. After the negotiations have concluded (i.e . the broker and unrepresented seller have finalized the checklist), the checklist can then be attached to the One Time Showing Agreement and become part of the contract between the two. This checklist can be as simple as the broker providing a list of questions to the owner and the owner providing answers, or it may contain more sustainable information (e.g. Commission, Legal description, Closing Costs, etc.).
The moral of the story is that a broker should try and negotiate the terms of any contract to get what the broker wants. However, the broker should also try to get as much information possible from the other party, in order to best represent the broker’s client (or, in this case, the broker should obtain the information with an eye toward negotiating the contract).
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