Meeting of the Minds and Time Adjustments
Real estate classes teach appraisers that the date of the contract is the "meeting of the minds" where both parties come to a mutual agreement and understanding. Further, most teach that this is then the date that should be adjusted to in terms of time adjustments. However, there are a few problems with this theory.
Meeting of the Minds is language borrowed from the legal sphere in which a contract is formed that is legally binding. Hence when a contract for the sale of real estate is signed, this is considered the meeting of the minds. However, I would argue that this muddied severely in the real estate world by contingencies and low cost/high benefit breach of contract abilities. Consider the following example:
The Smith family approaches a builder in a new development to have their dream home built. After a few weeks they have their dream home on paper, contracts printed, an earnest deposit of $10,000 prepared and contracts are signed. A month later construction has begun, and the Smith's discover that the Jones' are having a deck added to their new construction, and marble foyer, and quartz counters... none of which the Smith's had elected in the original contract. The builder's assure that the Smith's can in fact keep up with the Jones', and draw up the new documents and addenda to the original contract. A month later the Smith's breadwinner loses their job due to a major global pandemic, stock markets are in chaos and the housing economy looks bleak. The Smith's elect to breach the contract and lose $10,000 vs. being stuck in a mortgage their can't afford.
Where is the meeting of the minds in this scenario?
Any real estate appraiser who has performed new construction work knows that the process by which a home is built often has many addenda to the original contract. Which contract date is the meeting of the minds? Typical real estate deals have various contingencies (home inspection, pest inspection, appraisal, etc) which are all triggers to renegotiate the contract or make the contract null and void altogether. Nearly all contracts have an earnest money deposit, however very rarely is that sum of money truly punitive.
If "meeting of the minds" is merely an event where two people come to an agreement legally on a matter, then a real estate transaction may have a dozen such events and the term is of little use. However, if "meeting of the minds" is the certain, irreversible, legally binding act that culminates a real estate deal, then it has meaning and use to the real estate appraiser.
This is why I advocate that only the date of sale is the actual meeting of the minds for all intents and purposes. This is the date when the two parties finally, actually agree to terms. Therefore, when making time adjustments, the date of sale should be used NOT the date of contract. Until the ink is dry and the money changes hands, everything is negotiable.