State Contracts or Custom Contracts?

Question

Do you use your state contracts or get custom 1-2 page shorter contracts? I've heard the shorter contracts are easier to get people to sign, but I don't know if you can do that in Colorado. I want to be able to assign a contract, have escape clauses to get out if need be, and have a contract for seller financing if I come across such a deal.

I interviewed multiple real estate attorneys in the Denver area, and I hired one because he told me that he does work for real estate investors all the time. But I'm getting the vibe that he embellished his investor experience, because I'm having to spend more time, energy...and MONEY explaining what I'm trying to do, then him actually do anything for me.

So in short he tells me that in Colorado we have to use the state contracts, but the truth is I don't know if I trust his advice.....and I'll probably be looking for another attorney sooner rather then latter....lol

Thanks to all who read and respond!

Austin-

Anson Young · Answer

You dont HAVE to if you arent licensed.  You could use the one from Office Depot if you wanted to.

I use state not only because I have to, but because it brings credibility of coming straight from the state website and having nothing that I added that skewed it in my favor.  I found that argument disarms many homeowners, that I didnt just pull this out and its all in my favor, it comes from the state board.

Matt M. · Answer

I agree with @Anson Young x100. Why try to reinvent the wheel? It definitely adds credibility to say that almost all RE transactions use this contract. Plus there are MANY protections already built in to the contract for buyers.

Go to some of Greg Parham's classes at First Alliance Title. Most, if not all, are free. Then pick his brain. Be honest & upfront with the sellers as well. Good luck!

J Scott · Answer

In one state where I do deals, I would tell the judge, "That contract is copyrighted, must be licensed by a broker, and would be illegal for me -- as an unlicensed person -- to use."

Of course, he'd already know that...  :-)

In general, I'm a fan of the state contract (when it can be used) because it's free and you know it's going to cover all the basics.  That said, in my experience, state contracts tend to be very skewed towards protecting agents and sellers more so than buyers.

Also, my general philosophy is that if your deals are being held together by a contract (i.e., both parties aren't 100% happy with the deal), then you're doing something wrong.  I can't think of too many situations where I'd force a seller to consummate a transaction if they were adamant they wanted out...even if I had the legal right to enforce it.

Just my $.02...

Jean Bolger · Answer

I'm a fan of the state approved forms. I agree that it may look a bit more intimidating at first, but I have learned that simple isn't always better. By trying to "keep it simple" you can  get yourself in trouble by omitting something or accidentally creating ambiguities . If you make sure YOU understand all the clauses in the state contracts and can explain them to the other party in clear and simple terms then you should be fine.

Bill S. · Answer

@Austin Faux here is the link to the DORA forms. There are many state approved forms for various situations.

I would say this. You can close a deal based on what you put on a napkin but the contract is for if something goes south. I heard an RE attorney put it this way, What are you going to say to a Judge when he asks you to explain why you used your own contract when the state has one already provided?

I would say that putting stuff in writing tends to get people to the closing table which is why we have contract. At the same time I think telling someone, it's the state approved contract would make them more inclined to sign than the brevity of the document.

Travis Sperr · Answer

I'll disagree with @Anson Young just a little bit here. I would argue that a 2 page contract that clearly spells out what you are looking to accomplish is much easier to understand than the 17 page state contract. With that said, the state contract is free and comes with credibility that it is state approved, that doesn't mean that it can't be one sided.

Travis Sperr · Answer

It is not necessary to use the Colorado DORA approved contract when buying and selling real estate. 1-2 page contracts will accomplish the same result the 17 page state contract will. Fire the attorney, contact successful wholesalers in Denver.

Austin Faux · Answer

Have I told you guys how awesome you are!  I see a number of familiar faces always helping me out and answering my questions.  I want you all to know I extremely appreciate the help, and if you guys ever need any website/internet marketing help (I help out HomeVestors) just let me know!

Thanks,

Austin-

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