Getting an accepted offer is an exciting milestone for both buyers and sellers. After the negotiations, counteroffers, phone calls, texts and emails, everyone is understandably ready to move the transaction forward.
But before the attorneys begin working toward the contract stage, there is an important piece of communication that deserves careful attention: the deal memo, sometimes referred to as a memorandum of understanding or transaction memorandum.
After years of working in Westchester County real estate, I have learned that this is not something that should simply be forwarded without a careful review.
Before transaction information goes to the attorneys, the details should be checked—and then checked again.
What Is a Deal Memo or a Fact sheet in a New York Real Estate Transaction?
After a buyer and seller reach an accepted offer, the real estate professionals involved generally need to make sure the attorneys receive the basic business terms and information necessary to begin the next stage of the transaction.
How that information is communicated can vary. Sometimes I have received a separate document or form. Other times, the information has simply been included within an email or an ongoing email chain.
Regardless of the format, the important point is the same: the information needs to be accurate.
Depending on the particular transaction, information communicated to the attorneys may include:
- Buyer and seller names
- Property address
- Accepted purchase price
- Buyer and seller attorney information
- Financing information, when applicable
- Down payment or deposit information
- Anticipated closing timeframe
- Items specifically included or excluded from the sale
- Inspection-related information or other agreed-upon terms
- Brokerage information
- Other important business terms that should be communicated to the attorneys
Why I Always Review the Deal Memo
My approach comes partly from experience.
There have been transactions where I received the deal information as part of an email chain rather than as a separate document and discovered that a client's name had been misspelled.
A misspelled name may seem like a relatively small mistake, but transaction information should be accurate from the beginning.
I also experienced a situation several years ago involving buyers I represented. My buyers had reached an accepted offer, but another party had also submitted an offer on the property. During the communications following the accepted offer, information involving the other party was mistakenly confused with information involving my buyers.
The mistake was caught and corrected, but the experience reinforced something that has remained part of the way I handle transactions:
Once you have an accepted offer, slow down for a moment and verify the details.
Accepted Offers Can Involve a Lot of Communication
Think about everything that can happen before an offer is finally accepted.
There may be an initial offer followed by a counteroffer. Agents may speak by telephone. Buyers and sellers may communicate with their agents by text or email. Terms can change during the negotiations. There may also be several buyers making offers on the same property.
By the time everyone reaches an agreement, important information may be spread across several different communications.
That's one reason I don't believe an agent should rely solely on memory when reviewing the final deal information.
Go Back to the Emails, Texts and Notes
Before transaction information is sent to the attorneys, I believe it is important to compare it with the communications that produced the accepted offer.
That can mean going back through emails, text messages and notes from conversations.
The question I want answered is straightforward:
Does the information being communicated accurately reflect what the buyer and seller agreed to?
This becomes particularly important when a property has received multiple offers. Information involving one prospective buyer should not accidentally be confused with the buyer whose offer was ultimately accepted.
It only takes a few extra minutes to review the details, but those few minutes can prevent unnecessary confusion later.
My Deal Memo Review Checklist
Whether I am preparing transaction information or reviewing information received from another agent, there are several things I want to verify:
- Names: Are the buyers' and sellers' names spelled correctly?
- Property: Is the property address correct?
- Purchase price: Does the memo show the correct accepted price?
- Financing: Does the information accurately reflect the financing structure that was communicated?
- Attorneys: Are the attorneys' names and contact information correct?
- Dates and timing: Are relevant dates or anticipated timeframes accurate?
- Included or excluded items: Were any fixtures, appliances or other items specifically discussed?
- Additional terms: Were other important business terms agreed upon during the negotiations?
Then I read through everything one more time.
If I Receive the Memo, I Still Review It
The same principle applies when another agent prepares the transaction information and sends it to me.
I don't automatically assume that everything is correct simply because someone else prepared it. I review the information from the perspective of my client and compare it with my understanding of the accepted offer.
That isn't about finding fault with another professional.
Real estate transactions involve many people, a great deal of information and sometimes very fast-moving negotiations. Mistakes can happen. A second set of eyes can help catch an error while it is still relatively easy to correct.
The Attorneys Handle the Legal Documents
It is also important to distinguish between the role of the real estate agent and the role of the attorneys.
A deal memo is not the contract of sale, and real estate agents should remain within the appropriate boundaries of their professional role.
The attorneys representing the buyer and seller handle the legal documents, review contractual language and provide their clients with legal advice.
From the real estate side of the transaction, one of my responsibilities is helping to make sure that the business terms and other relevant transaction information being communicated are as clear and accurate as possible.
An Accepted Offer Is Only One Step
Reaching an accepted offer is important, but buyers should understand that there are still several steps ahead before they own the property.
Those steps can differ depending upon the type of property being purchased, how the purchase is being financed and the circumstances of the transaction.
For buyers considering a co-op in Westchester County or elsewhere in New York, the process can include additional financial documentation, building requirements and a co-op application and approval process.
I've created a separate resource explaining many of those issues: NY Co-op Buying Made Simple: Rights, Documents and the Buying Process.
If you're trying to understand more of the financial side of purchasing and owning a home—including the expenses that can extend beyond the purchase price—you can also visit The Money Page.
Understanding these issues before you get deep into a transaction can help you ask better questions and work more effectively with your real estate agent, lender, attorney and other professionals.
Professionalism Is Often Found in the Details
Most consumers understandably think about the highly visible parts of a real estate agent's job: finding the right property, marketing a home, negotiating the offer and eventually getting to the closing table.
But a great deal of real estate work happens behind the scenes.
Carefully reviewing transaction information after an accepted offer is one of those tasks. It may not be the most exciting part of buying or selling a home, but getting the details right matters.
My approach is simple:
Check the names. Check the property. Check the numbers. Check the dates. Review the emails and texts. Confirm the accepted terms. Then read everything one more time.
Because in a real estate transaction, professionalism is often found in the details.
Frequently Asked Questions About Accepted Offers and Deal Memos
What is a deal memo in a New York real estate transaction?
A deal memo is a communication used to provide attorneys and other transaction professionals with important information about an accepted offer. The exact terminology, format and information included can vary depending on the transaction and the professionals involved.
Is a deal memo the same as a real estate contract?
No. A deal memo should not be confused with the contract of sale. The attorneys representing the buyer and seller handle the legal documents and advise their clients regarding contractual and legal matters.
What should be checked on a deal memo?
Important details may include the spelling of the parties' names, property address, accepted purchase price, attorney information, financing information, relevant dates, included or excluded items and other business terms communicated as part of the accepted offer.
Why should emails and text messages be reviewed after an accepted offer?
Real estate negotiations can involve offers, counteroffers, telephone calls, emails and text messages. Reviewing those communications can help make sure that the information being communicated after the accepted offer accurately reflects the transaction.
What happens after an accepted offer in New York?
The exact process depends on the transaction. The parties generally move toward attorney involvement, due diligence and preparation and review of the contract. Financing, inspections, property type and other circumstances can affect the process. Buyers and sellers should rely on their respective attorneys for transaction-specific legal guidance.
Does buying a New York co-op involve additional steps?
It can. Co-op purchases may involve review of building financial information and governing documents, financial requirements, an application package and an approval process. For more information, visit my NY Co-op Buying Made Simple resource.
Can a real estate agent provide legal advice about a contract?
A real estate salesperson is not a substitute for an attorney. Questions involving contractual rights, legal obligations or interpretation of contract language should be directed to the buyer's or seller's attorney.
Thinking about buying or selling a home in Westchester County? I'm Thomas Roberts, RealtorTom, a New York licensed real estate salesperson with William Raveis Real Estate in Rye. I help buyers and sellers navigate the details of a real estate transaction from the initial conversation through closing.
This article is provided for general educational and informational purposes only and is not legal, tax, mortgage or financial advice. Real estate procedures can vary depending on the circumstances of a transaction. Buyers and sellers should consult the appropriate licensed professionals regarding their individual circumstances.
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