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It’s hard to believe, but I got my real estate license in Florida in late 2001. Much has changed, including contracts and addendums. Time flies when you are having fun.
Flash forward to 2023, and I’m still alive and kicking in the industry. During that 22-year timespan, I obtained my broker’s license in Florida and, more recently, my real estate license in California.
Given my background, I totally understand being a seasoned veteran in one market and being newer in another, both with completely different sets of contract forms, local customs and expectations on writing and submitting offers.
I remember writing my first offer in Florida like it was yesterday; my stomach was in knots as I fretted about making a mistake. I was so worried that I had failed to check an important box or not include something that the buyers wanted or would screw up a contingency or important timeframe and something catastrophic would happen.
I must have reviewed the contract 15 times over and asked a more seasoned veteran to look at it as well before I submitted it. You know that feeling that you might be missing something after you’ve reread the same document umpteen times? Thankfully, I made it through the critical milestone of that first transaction.
Flash forward to writing my first offer in California a few years ago, and that uncertain feeling came back, but in a different way. I knew generally what to look out for, but was working with a totally different subset of forms, required disclosures and lots of fine print that addressed just about everything you could think of (good), but definitely a lot to get your arms around.
Thankfully, I had a deep bench of tools to prepare me, along with advice from a few trusted colleagues. The stakes were high given the price point and all I had been told about the litigious nature of California real estate.
My sense of awareness as a veteran agent in one market made me not want to look like an inexperienced rookie who submitted a sloppy or incomplete offer in my new market. I wasn’t known in my new market and was concerned that the listing agent may want to discount me if they received an incomplete offer package.
I knew too much and had experienced those scenarios many times over as a listing agent in Florida, and was trying to ensure I wasn’t “that agent.” The worry started to run through my mind… Did I do all that I needed to do? Did I leave anything out? What don’t I know that I need to know?
Given this interesting dichotomy across two markets, I embrace the challenges of a well-written and organized offer. As agents, all we have is our reputation, and reputation and first impressions are formed by our actions and work product. First impressions matter not only with buyers and sellers but also with other agents.
I also know there are different levels of expectations (or not) in various markets and what is acceptable in one market may not be in another. It may even result in your offer not being considered.
With highly competitive real estate markets in so many areas across the country over the last three years, an incomplete or sloppy offer may not have been taken seriously or may have gotten lost in the sea of 20 other offers that were vying for the listing agent and seller’s attention.
Just because someone is a seasoned agent does not mean that they aren’t making mistakes or employing sloppy practices when it comes to contracts. It can be easy for veterans to skip out on contract training and updates, as they think they know all they need to know or don’t have time to attend webinars or in-person classes. They may miss critical changes to forms or new forms that need to be utilized.
That being said, no matter whether you are a newbie, a few years into the business, somewhere in the middle or a seasoned pro, the definition of insanity is doing the same thing over and expecting a different result. Here are 15 contract mistakes that need to stop.
1. Failure to notify
Please don’t just send an offer out of the blue without a heads-up to the listing agent. I know buyers can be fickle, and they tell you while showing the property they want to write an offer, and then it turns into two days later before they actually do so as they had to check with their lender and run 10 different scenarios.
Please, for your sake and your buyer’s sake, you put time into showing them the property, you put time into answering their questions and providing information, so check in with the listing agent early and often to give them a heads-up about their interest. Check in again when you are writing the offer and when you send it over.
If a listing agent doesn’t hear from you, they could already have other offers in the works that you don’t know about, or maybe an offer that seemed DOA has been revived. You are doing a disservice to your buyers by not proactively advising the listing agent about sending an offer over.
Offer packages can often land in the junk/spam folder and not every agent is diligent about checking those. Some emails that are sent never land in the agent’s inbox, depending on their spam filters and other settings that may not recognize the sender.
2. Outdated or vague lender letters or proof of funds
Despite requesting this in the offer instructions, I am amazed at how many times I have received offers that include a vague or inaccurate prequalification letter (who even relies on those today?) or a form of a “preapproval letter” that has another property address or an approval threshold that is below the listing price and offer price written on the contract.
Some of these letters are older than six months. Has the buyer recently talked to the lender based on the current rate scenarios? Many loan programs have tightened up and increased down payment requirements. Submitting an offer is not the time for the buyer to learn about these things.
The other mistake I see all too often is proof of funds submitted as photos taken of financial institution statements or screenshots from the account on a mobile device.
One of the best examples of sloppy proof of funds was a cash offer I received on a listing last year, where a picture of the buyer’s funds was literally taken on a computer screen by the agent. The buyer was with the agent in their office and took a photo, including of the computer.
Really? You could barely see any details and it was like pulling teeth to get a better copy. And this was from an experienced agent. The listing was with a corporate relocation and I had a detailed list of offer instructions posted under the documents section of the MLS as to what was needed, including requesting proof of funds in a .pdf format and stating no screenshots.
Needless to say, this created a lot of unnecessary back-and-forth requesting this in a proper format.
How difficult is it to ensure that you have an accurate lender letter (and it needs to be stronger than a prequalification with an unknown lender) and .pdf statements from legitimate financial institutions that match up with the buyer’s name and offer price and total cash to close needed including down payment, closing costs, etc.?
If the proof of funds supplied does not match how the buyer is taking title, please include a letter of explanation and supporting documents. For example, if they are in a corporate entity, supply documentation showing how that buyer is connected to that entity. Please make sure one plus one equals two.
Many times, the financial documents submitted do not and the listing agent is left with a mess to sort through to try to make sense of things. For some reason, knowing how to access that information and download it or print it to a .pdf to include as part of an offer package seems to be a lost art. Maybe this should be taught in contract training classes.
Sadly, I have seen many instances of no financial qualification documents at all included with an offer, no matter the price range.
3. Lack of details about financing
How the buyer’s financing information needs to be completed varies among real estate contracts in use across the country. In some cases, agents leave all fields blank other than the offer price and the binder or escrow deposit amount. This can be very frustrating when there is no information about the down payment or loan amount included.
This leaves the listing agent with no clue as to the financial strength of the buyer and results in a lot of back and forth asking the selling agent to get this information. Many times the selling agent doesn’t really know and it results in a bit of chaos between the buyer, lender and agents.
Why does this matter? Listing agents need to understand the financial viability of the buyer when it comes to advising their sellers, so they understand the potential upsides or downsides of that particular buyer. It is a reasonable expectation to know how much, or an approximate percentage, of a down payment the buyer is doing, along with the amount they plan to borrow.
The seller needs to understand the risks involved and the likelihood of that buyer being able to get to the closing table.
4. Binder / escrow deposit
This amount will vary depending on your market, and what local custom is as far as an acceptable amount and, of course, depending on the buyer’s financing (such as VA or FHA vs. conventional). In some markets, when there isn’t a minimum amount that is typical for the area with regard to price range, you may receive an offer with a weak deposit.
While deposits can be refundable if a contingency comes into play, as a listing agent, we need to see how much skin in the game the buyer is willing to have. In my Orange County, California, market, for example, an acceptable escrow deposit is 3 percent of the purchase price, so everyone knows what to generally expect (although typically not required).
That being said, I often see little thought given to a deposit amount in my Florida market, so the amounts are all over the place. If you are writing an offer on an $850,000 home, do you really think a $5,000 deposit is sufficient? If you don’t know, ask your manager and more seasoned agents in your office for some guidance, or talk to the listing agent to get feedback on the amount they would be looking for.
5. Contract timeframes
Please get a calendar out when you are writing an offer and count all out before writing in the number of days or specific dates. Discuss these dates with your buyer ahead of time. Buyers are famous for suddenly going out of the country or being on a cruise ship when it is “go” time during a real estate transaction, and they didn’t realize the closing date fell during their trip that was supposedly booked six months ago.
While most real estate contracts state that if a contract timeframe falls on a Saturday, Sunday or a legal holiday, it rolls over to the next business day, please be precise with your dates and ensure all participating parties, including the lender, can work with the timeframes you are creating.
Don’t write in a 15-day closing just to get the offer accepted if you haven’t discussed that with the buyer’s lender first. Also, pay attention to whether your contract deals with calendar days, business days or some combination thereof.
The number of offers I have received where timeframes overlap, conflict or just don’t make sense is mind-numbing. I love offers with 30 days for loan approval and where the closing falls within the loan approval period or a day after the approval period is up.
If you are writing an offer with a quick close, having a long inspection/due diligence period is not going to fly, so please consider what logically and strategically makes sense.
Also, writing in things like “closing within X days from the date of acceptance” can be confusing for all parties and cumbersome to calculate. The date of acceptance usually changes while trying to get the agreed-upon offer signed and changes initialed. This could result in the final date varying by a few days, which could be problematic for various reasons.
The X days from the date of acceptance could land on a Saturday, Sunday or legal holiday and while that means closing rolls over to the next business day, why create confusion? Specific closing dates are always better and easier to work from.
6. Contract deadlines
Many agents drop the ball when it comes to tracking deadlines, particularly when it comes to loan approval. The loan approval date has a way of sneaking up on everyone in the transaction and when the listing agent is trying to track down an update a few days before loan approval is due, it often turns into a fire drill between agents, lender and the buyer.
When a deadline is nearing, agents often fail to monitor and are left scrambling to get an extension in place at the last minute or after some prompting by one of the agents in the transaction. Working with a transaction coordinator can help all parties stay on track.
7. Home warranties
How many times have I received an offer with a box checked where the buyer is asking the seller to provide a home warranty at closing and the agent hasn’t provided any information: The specific home warranty company desired, the level of coverage, what it should include, and “at a cost not to exceed X amount”.
Some contract forms are buttoned up about this and leave little room for error with plenty of fields and prompts to remind you to complete the information. Others, not so much.
Hence, when that happens, guess what? It is often the listing agent’s choice — in reality, the seller really doesn’t know or care, and a listing agent may not consult with the selling agent, so what you end up with is the least expensive, most basic plan that doesn’t address the components of the home the buyer really cares about.
Many agents fail to do any research when addressing this on an offer when all they have to do is go to the various warranty plan websites (you should have an agent login for all the ones in your area) and you can review the plans with the buyer and help them determine what they want to request.
You need to be specific, down to the letter here, so please send the most recent home warranty brochure to the listing agent with the offer so they can reference the plan information you are asking for and see the cost; don’t leave them guessing or have them complete this information for you based on the brochure.
Agents, beware — inflation has also impacted the cost of home warranty plans, just like everything else. It is prudent that all agents, no matter their level of experience, are up to speed with the latest costs for these plans, what they do or don’t include, and what is considered extra, especially if home warranties are something that is often requested in your market.
Lastly, please don’t go back and ask the seller to add a warranty later, and I’m not talking about as a result of inspections or a repair negotiation. I recently had that situation simply because the agent claimed they initially “forgot” to write it in the offer.
At this point, we were knee-deep into the transaction, past inspections and the seller had already made repairs, including replacing a water heater. Sounds like a great closing gift to me.
8. Seller concessions
This is another area rife with mistakes. Make sure you clarify with the buyer’s lender (before writing an offer) what you can request based on the kind of loan the buyer is doing. Words matter. Are you asking for up to a percentage of the purchase price or a dollar amount? Have you walked through what the closing costs and/or prepaids are for the buyer so you can request an appropriate concession? While you want to allow enough of a cushion, if you go in with a large number simply because you don’t want to take the time to drill down into actual amounts, this could be a huge turnoff to the seller when the amount really needed is much less than the number or percentage being requested.
If you are asking for a concession towards an interest rate buydown, make sure you consult the lender on the wording — Is it a temporary buydown or a permanent one? Vague or unclear requests only delay the ability to get an offer accepted. Don’t just write “up to 6 percent towards closing costs” — put some thought into this. If you don’t know, don’t expect the listing agent or the seller to understand it either.
The burden is not on the listing agent to call the buyer’s lender to figure it out. If you really want to go out of your way to be helpful, include a good faith estimate from the buyer’s lender with the offer so the listing agent can review it with their seller and get a sense of that lender’s charges. Have the lender call the listing agent to touch base on the concessions as well.
I’ve seen some instances where lenders took the opportunity to inflate some charges knowing the buyer was going to ask the seller to pay all or some of their closing costs. Closely scrutinize lenders’ estimates in this regard before submitting them with an offer.
If you are dealing with any special contingencies in your offer outside of the normal ones that most contracts cover — financing, inspections, appraisal, and so on — please be specific. When it comes to contingencies on selling property, please include the address.
Also, state that the offer is contingent upon the sale and closing of XYZ Street. If the property is already under contract, state it is contingent upon the closing of XYZ Street or incorporate the appropriate contingency addendum for your market.
It is helpful if you offer a date by which a contingency on a property sale and/or closing will happen — listing agents and sellers are reluctant to leave a property sale contingency open without a specific date. While not required, it is also appreciated if you include a link to the buyer’s current listing, if their property is on the market, along with a copy of the buyer’s contract on their home.
10. What stays or goes
Many “level 10 meltdowns” occur at the final walkthrough when chandeliers or bathroom mirrors got up and walked away in the middle of the night. The same for curtains, rods, some appliances or other items like patio furniture that the seller had agreed to leave behind that have vanished with no explanation as to their whereabouts.
When in doubt, write it out. Check your contract language carefully as it pertains to attached items and what is listed as included in these paragraphs. The listing agent may have stated in the MLS that curtain rods and drapes in X room were excluded, but this detail was omitted when the contract was being finalized. Hence, the seller removed these, but contractually this was never addressed.
The MLS sheet is not a contract and usually contains a disclaimer about “information deemed reliable, but not guaranteed” so you can’t look to MLS; it is what is written in the contract that matters.
Personal property is best conveyed as a separate addendum so as not to trigger sales tax, plus most lenders won’t want to see patio furniture or a barbecue on the contract since parties are supposed to be at arm’s length.
11. Additional terms
Different contracts address things like television brackets, patching holes and the condition of property left at the time of closing differently. Please read the fine print here.
If your buyer wants the home to be professionally cleaned by the seller upon vacating, “broom swept” condition, which is often the standard referred to in many contracts, is not the same thing.
While some sellers opt to have their home cleaned upon moving out, not all do and you can’t assume. Some sellers think they are going to come back to clean once their movers come and that never happens — the movers are often delayed, things took much longer than expected, they had way more stuff to deal with (almost always), they are beyond exhausted and their vacuum, brooms and cleaning supplies are either on the moving truck or at their new home.
If your buyer wants all holes patched and/or painted where items were hanging on walls, make sure you write this specifically in the contract. Understand that paint will likely not match the existing walls — sellers may not have paint and have to get some made — and the original color may not be the same mix as it originally was.
I have encountered many situations where the selling or listing agent and I have discussed specifics regarding some additional terms of importance and exchanged emails about what a contract will need to say, but when the agent makes the changes and sends it over or prepares a new counter offer, there is nothing mentioned and we have to go back and run interference with getting this corrected and signed again.
12. Time for acceptance
This one is often ripe with error. Stop sending over offers with barely any time for acceptance. Just because you’ve put a short timeframe, such as four hours, doesn’t mean it is going to happen.
I know you think your offer is very strong and the buyer thinks they can play hardball by giving the seller an hour to accept it or not, but the reality is the real world of offers doesn’t work this way.
While time is of the essence, there is time involved with not only sending and explaining the offer to the seller but discussing and determining how they want to handle it. Everyone is anywhere but “here” these days, so you need to reach out to the listing agent before finalizing your offer to ask how reachable the seller is, is anyone traveling, etc.
You also need to allow enough time for negotiation and finalizing the offer in whatever way that is handled in your area. Some use counteroffer forms, others mark up a contract, etc. All the back and forth with signatures rarely happens in a couple of hours unless an offer was beyond a seller’s expectations with absolutely nothing that had to be clarified or modified upfront.
Keep in mind, the time for acceptance will have to be yet another change that will have to be made if you wrote in a date/time that is too soon and often turns into the past very quickly. In addition, you could end up eliminating your offer because once the deadline passes, it is past and if another offer comes in that the seller would rather work with, and yours is technically expired, then you’ve just killed the deal before it had a chance to begin.
There is definitely a need to be strategic when it comes to time for acceptance, so discuss with your buyer accordingly because they don’t understand. While no one wants their offer to drag out for a prolonged period of time or be used to attract other offers, it can be very difficult to control this relative to what the listing agent is doing.
The listing agent was hired by the seller to obtain the best price and terms. Some of this also depends on the kind of representation they are providing with respect to agency, etc.
13. Rewriting contracts
Depending on what is customary in your area and the forms you utilize, some agents take it upon themselves to completely rewrite a contract based on all terms agreed upon. Yikes. This can leave room for mistakes with numbers transposed and details left out. Especially if the agent goes into the draft of the first offer and starts making changes. It can be very easy to get confused. Don’t do this.
There needs to be a chain of documents showing the changes and offer/counteroffers between the buyer and sellers.
14. Escalatory addendums / clauses
If you are in a market that utilizes these addendums, take note. When the market got super crazy, it was not uncommon to receive escalatory addendums that did not have a cap on the maximum purchase price the buyer was willing to go to.
I would see things like the buyer will go $1,000 over the highest offer at a price not to exceed, and the space was left blank. Guess what? When that buyer found out what the highest offer came in at and had to go X amount over that, suddenly, they were no longer interested as the price was too high.
Don’t do this. It is like playing with pretend money. We aren’t playing a game of Monopoly here. Only have buyers commit to what they realistically are willing to do. There is no sense in wasting a seller and a listing agent’s time with an unrealistic number or leaving these spaces blank.
15. Offer packages
Lastly, what good is all of the above if you don’t know how to package and present the offer to the listing agent? While not a contract mistake, sending multiple emails with various attachments relating to an offer is sloppy and leaves a lot of room for mistakes. The forward of a forward of an email from an electronic signing platform does not go over well.
An offer package should contain all attachments in one email whenever possible, unless size limitations do not allow. Be conscious of the file sizes you are attaching as not all email providers will allow these to go through.
This can be particularly problematic with home scanning equipment if someone is scanning their proof of funds, etc. Printing or downloading to a .pdf is better.
Please summarize the terms of your offer in the email to the listing agent so it is easy for them and the seller to reference. If the agent has to cross-reference multiple emails and attachments to figure out what is what, it turns into a frustrating experience.
The goal is to demonstrate how well organized you are and that you and the buyer have their act together and will be easy and professional to work with. If you have to send more than one email, please reference the property address in the subject line, along with the word offer and be sure to note email 1 of 2, etc.
Let the listing agent know how many emails to accept, ask them to confirm receipt and always cc yourself.
A listing agent can often feel like a teacher, having to correct and clarify what was sent to them. Don’t be that agent who constantly has to have their offers fixed.
While no two transactions are the same and each requires a different set of clauses or addendums, take some time to become more aware of what you are doing well and what areas need to be tightened up. Actively engage in contract updates/best practices classes when they are taught. Practice, practice, practice.
Utilize a transaction coordinator if you aren’t already. Given the volume of contracts they work with, they have likely seen it all and can give practical advice on working with your local forms.
Lastly, please take some time to read the MLS listing and any offer instructions as well as other documents posted. Many times, required addendums that have been signed by the seller are included with the listing.
Note how to spell the seller’s name or the correct way they are taking title if a trust, corporate entity, etc. If you aren’t sure, reach out to the listing agent to verify.
Always check with your buyer on how they wish to take title so you write that in the offer correctly the first time. Having this conversation with the buyer early on can ensure you prepare an offer correctly and have them provide you with the appropriate documentation you need vs. a last-minute amendment that needs to be signed by everyone before closing.
Cara Ameer is a broker associate and global luxury agent with Coldwell Banker Vanguard Realty in Ponte Vedra Beach, Florida. You can follow her on Facebook or Twitter.