Home Buyer Tip of the Day

When negotiating a contract on a home, everything must be agreed on or you don’t have a fully executed contract. Well, actually almost everything. There is one clause in the contract that if one party initials and the other party does not, you still have a deal. This is the Arbitration Clause. If there is a dispute between buyer and seller, they have agreed, per the contract, to go to mediation. If mediation fails, then there is the option to go to arbitration. If both parties agreed to the arbitration clause in the contract, then you are required to go to arbitration if mediation fails. Arbitration is binding whereas mediation is not binding and is usually an effort to come to a mutually agreed upon compromise. I have heard different things about arbitration. It may or may not be more expensive than going to court. The key is if you don’t sign the arbitration clause, you can always decide to go to arbitration later if there is a dispute. But if you do sign this clause, then arbitration is mandatory in the event that there is a dispute and mediation fails. If you don’t sign, you leave your options open for later.