Real Estate Sales Contract

Missing a red flag in the sales contract when purchasing a home can have serious consequences.

Despite recent fluctuations in the housing market, economists still agree that home ownership is the key to building wealth and stability. Buying a home is an exciting step for folks looking to achieve their American dream.

Despite the benefits of homeownership, however, missing a red flag in the sales contract could lead to serious property ownership issues. Buyers who do not notice these issues during the negotiation phase may end up overpaying for their home or purchasing a house with significant structural problems.

Luckily, we are here to help. Watch out for these warning signs in a real estate sales contract to avoid unpleasant surprises when you close on your new home.

four real estate sale sales contract red flags

Sellers Who Will Not Budge on Price

When buying a home, it is customary for a buyer to attempt to negotiate a better price than the listing offered. If the seller will not come to the bargaining table, this can be a red flag.

In some cases, the house might truly be worth the original list price. Often, however, if the seller refuses to be flexible on the price, it is a sign that they will be difficult to work with throughout the entire negotiating process. It is best to find a seller who is willing to practice some give and take.

No Disclosures

During the negotiation process, sellers are required to fill out a list of “disclosures” outlining everything they know about the condition of the property. This is very important for buyers to get an idea of the history of the home.

In some cases, however, a seller might skip over the disclosures by claiming they do not know anything about the home’s condition. This should be a huge red flag for buyers. If the sellers claim they know nothing about the home, that means the buyer is essentially entering the transaction blind.

“Kick Out” Clauses

In most cases, once a seller accepts an offer from the home, they take the property of the market and stop considering other offers. A so-called kick out clause, however, gives property owners the right to consider other offers and reject your offer after the contract has been signed.

This arrangement benefits sellers who can continue looking for better offers while waiting to close. For the buyer, however, it creates pressure to close quickly before the seller backs out. This can be a problem if the buyer needs to sell their current home before finishing the transaction.

Low Appraisal

Once the seller has accepted your offer, there will be an official appraisal on the home. The purpose of the appraisal is to determine if the price you agreed on with the seller is a fair market value.

If the appraisal comes back low, the bank likely will not finance the loan at the agreed-upon sale price. In this instance, you will want to work with the seller to bring the price in line with the appraisal.

Evaluate Your Sales Contract Today

With these tips in mind, you will be able to better understand your sales contract and identify potential issues that can cause problems down the line.

Do you have more questions about your real estate documents? Then contact or call the Law Offices of Lisa Wills at (925) 463-9000 to schedule a consultation today.

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