Top Red Flags in Real Estate Contract Negotiations
You are in the middle of contract negotiations for a home sale, but there is something that does not sit quite right. Do not ignore the red flags. On average, it takes 50 days to close on a home, and in that time, issues can arise. We put together a list of the top red flags in real estate contract negotiations that you cannot ignore.
Poor Communication throughout the Contract Negotiations
Lack of communication is frustrating for everyone involved. A message is not passed along, details were not laid out clearly enough, or other underlying problems are not addressed.
No matter which party is slow to respond or not following through on commitments, communication is essential in progressing real estate contract negotiations. When there is a consistent lack of communication, it is time to start asking questions and possibly reconsider your contract negotiations.
Heavily Modified Contracts
In most cases, real estate transaction contracts are standard, but buyers and sellers have the option to modify contracts with addendums. When a contract deviates from the standard, it is time to read the fine print and pay close attention to every little detail.
A buyer might request that the seller pay a portion of closing costs or to include some home appliances. A seller sometimes adds an “as-is” addendum which means the home is being sold in its current condition without repairs.
Go over the contact with your agent and speak with a real estate attorney before signing.
Failing to Address Conditions Precedent
A condition precedent is a condition or duty that a party must accomplish before a contract moves forward. Failing to address these conditions puts a stop to the entire process.
Failure to accomplish agreed-upon duties or conditions is a huge red flag, and this is when a real estate attorney comes into play.
If you are the only one giving and the other party consistently puts their foot down and refuses to be flexible, the process quickly turns into a nightmare.
It is normal for buyers and sellers to negotiate finances, but when one is giving much more than the other, it is time to be alert.
Buying or selling a property is stressful enough without added opposition at every turn.
A 2020 survey done by the National Association of Realtors revealed that 76% of closed sales had purchase contingencies and 9% of those fell through.
Contingencies are common in real estate and it is an action or condition that must take place in a specific time frame before the contract is binding. It is a way for a party to back out unless specific conditions are met.
The three common home buying contingencies are:
- Financing: The contract is cancelled if the buyer does not secure financing.
- Appraisal: The home must be appraised at the sale price or higher.
- Home inspection: The home needs to pass inspection.
A long list of contingencies means the process will not be simple and straightforward.
Watch Out for Red Flags in Your Contract Negotiations
We hope for smooth sailing in real estate contract negotiations but when something seems fishy it is okay to take a step back.
If you are buying or selling a home, you need your rights protected.
Are you in California? Don’t hesitate to contact us today at the Law Offices of Lisa Wills, a Professional Law Corporation.