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IRAC & Writing Powerful Addendums (Part 1/2)

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IRAC And Writing Powerful Addendums Outline

Being an effective communicator is key to being a good realtor.  Here are 2 tools to make you the best agent you can be.

Communicating effectively when things are good comes easily for most.  Communicating effectively and getting the other side to see your way when things are strained is an art.

IRAC is how you get the other side to see it your way when things get strained.

So you cured transactional Chornobyl, now what? You need a well-written addendum to shore up the terms. A good addendum gets your client to the goal, makes you look like a rock star, and keeps you out of hot water should things go south.

How to communicate in difficult situations 

  • Write your position in an IRAC format.  
  • 1 sentence for each IRAC element.
  • Leave emotion out, don’t play the blame game, people only get defensive.  

I.R.A.C

  • Issue, state the facts of what’s wrong in as few words as possible. 
  • Rule, give the contract provision, statute, or common law that controls that issue.
  • Analysis, tie the facts of your situation and the law together.  
  • Conclusion, conclude why the rule controls your facts to the outcome you want.

Here is an example of IRAC in action:

Issue: 

  • The Buyer found water in the kitchen cabinet at the time of the walk-through inspection.

Rule:  

  • Paragraph 11 of the Contract says, “Except for ordinary wear and tear, Causality or Loss, Seller shall maintain the Property… in the condition as of the Effective Date.”. 

Analysis

  • Because there was no leak on the Effective Date (we have the inspection report to back this up), and the Contract says only “ordinary wear and tear” is an exception, it is the Seller’s duty to fix the leak prior to closing.

Conclusion

  • As the closing is Dec 5, 2044, please let me know when the Seller has fixed the leak so we may reinspect.

Very important Note and little-known contract rule,  Section 9(a) line 142 of the contract requires sellers escrow if they don’t repair.  

Tips:

  • You would not write “issue”, “rule” etc in front of your sentence.  
  • You can use the exact words in the contract, always a good idea. 
  • Always use the “defined terms” from the contract when you can.
  • Don’t play the blame game, you will make the other side defensive, and take more time then you need to invest to get to the goal.
  • Most importantly, and the ones everyone forgets; always end with a CTA (call to action), and tell the other side what you expect they must do next.

So you got the other side to see it your way, now you’ve got it “get it in writing”.

Writing powerful addendums use this acronym to remind you of the important elements to include when writing powerful addendums 

PET DUCK

Price must be a specific value. Some issues may not have a price, but an agreement to agree on a value later can be an unenforceable agreement.  

Event must be a specific event.  Everyone must be able to look at the event and recognize it.

Trigger date, there usually is a specific date something has to occur by. An agreement to agree in the future can be unenforceable 

Don’t say too much keep it ot the bare minimum to achieve the goal

Use defined terms, and capitalized words in the contract Closing Date, Effective Date, Personal Property

Collateral dates don’t change if you change the Inspection Period and want to extend the Loan Approval Period, say it

Know your contract, the contract is good.  Most issues are well thought out and in there.  Read it 3 times today and once a month.  9 out of 10 times a realtor calls, the issue they are writing an addendum over is already in the contract 

Example: found this in an actual addendum “Seller will pay/close all open/expired permits, special assessments… and the property shall be free and clear of all taxes, liens, and assessments.”.

What’s contemplated, 9f assessments or condominium assessments???  

And how do you convey property free of all taxes? It’s already in the contract line 472, and Liens are already dealt with in line 412

Don’t tell a long factual story, tell the bare minimum to achieve the goal. The other side can use this against you if things boomerang and lawyers get involved.  I’ve sat in too many depositions where realtors were sweating when the lawyer said, what did you mean by this…

4 Corners Rule, A well-written addendum stands on its own.  It’s is brief, to the point, and can be interpreted by any 3rd party.  If you need a backstory to understand the addendum, you need to rethink what you wrote. 

Use addendums for everything they cover your exposure, parties can digitally sign, and send it to your title company right away.

Post-closing addendums, for that roof that’s still leaking, for example.  Follow PET DUCK closely, and call me before you draft if you have any questions.  There has to be a drop dead date and clear statement as to what the seller has to do, and clear instructions as to when the title agent is supposed to deliver the money to the buyer or seller, and under what terms.  

Go To IRAC & Writing Powerful Addendums (Part 2/2)

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