Four Common Oversights On A Real Estate Contract

Real estate agents do their best to explain the intricacies of real estate to first-time and inexperienced home buyers. Despite this, there can be things that are missed because they are trying to explain an entire industry to an individual in a short amount of time. Home buyers who are reviewing their real estate contracts should keep a few things in mind.

Many Fees Are Negotiable

During the initial phases of the contract, you can often request that the seller make certain concessions. Concessions can include everything from offering free appliances to paying your loan origination fees. Real estate agents may not push these concessions if they are not asked to, as it can make the process of negotiations longer. But if you let your agent know that it is important to you, they may be able to help.

"Not to My Knowledge" Is Not the Same as "No"

Even if a seller suspects their home was once flooded, they can still list "NMK" (Not to My Knowledge) to a question about flooding. This is because they aren't certain that there was flooding. It's very important that you don't trust a contract in this regard; you should always seek to independently confirm anything on the contract. If there's something you're particularly concerned about, you should ask directly. 

You May Need to Set Up a Contingency

Contingencies are designed to protect you in the event that certain things don't occur that are necessary for you to complete the sale. For instance, if you're purchasing a home while selling a home, you need to have a contingency that lets you out of the contract if your home's sale falls through. If you're going through a bank, you also need to have a contingency that lets you walk away from the contract if your lending standards significantly change.

You Should Always Include a Home Inspection

Your home inspection could lead to the discovery of significant defects in your property. Consequently, the real estate contract should always include a clause that lets you walk away following a home inspection. Though you usually can walk away otherwise, you might have to sacrifice your earnest money if there isn't a clause specifically protecting you.

Never be afraid to ask your agent questions about your contract. Many buyers feel pressured to read through the contract as though they understand it -- especially because there is usually a time limit involved. Taking some time to go through the contract line by line can help avoid costly mistakes.