10 of the Biggest Mistakes Buyers and Sellers Make When Relying Upon 'Standard' Forms to Buy and Sell Property

IssueBuyer's TipSeller's Tip
1. Identity of BuyerNot considering selection of the appropriate entity.If the buyer is a new entity, not getting a financially sound individual to sign as well.
2. Identity of SellerNot checking title to make sure you're dealing with right partyIf the seller is anything other than individuals, not making sure you have correctly identified the seller and not going through the proper steps to get authorization to sell
3. Description of propertyNot identifying all real property, personal property and improvements with as much specificity as possible. If commercial, include all property addresses, square footage of land, square footage of all improvements, and all appurtenances. If residential, make sure to specifically identify any personal property item that you are not sure would otherwise be included.Accuracy is in your best interest as well. But be sure to include "AS IS, WHERE IS" disclaimer and agreement by Buyer.Make sure to exclude in writing anything you don't want to sell.
4. StructureNot considering asking the seller to carry back paper at some point in the negotiation process. Could be a win-win.Not considering offering to carry back paper at some point in the negotiation process. Could be a win-win. Especially for older sellers looking for annuity income.
5. Seller Financing (assume it's a 2nd)
  • Not asking for right to subordinate.
  • Not asking for right to prepay without penalty.
  • Agreeing to blanket right to subordinate.
  • Not getting prepayment penalty.
6. FinancingNot protecting yourself if rates go up too high during loan contingency
  • Not doing your own pre-qualification of buyer before tying up your property
  • Not making sure the terms of the proposed financing are not so rigid that the loan contingency clause gives the buyer another escape clause late in the escrow period.
7. Deposits
  • Not trying to make sure the deposit (and the deal) is totally within your control during the entire "free look" process (i.e., within your "sole, absolute and arbitrary discretion").
  • Not trying to provide that deposit refundable if buyer either terminates before expiration of "free look" period OR "if the closing does not occur, unless such failure to close results directly from an unjustified and unexcused failure by Buyer to pay the purchase price at the Closing."
  • Not trying to resist such attempts.
  • Not getting a big enough deposit.
  • Not asking for increase of deposit after contingency period over.
8. Contingencies
  • Not trying to make sure your contingency period is truly a "free look" within your sole discretion.
  • Not having contingency period start until you receive the last of all due diligence documents requested.
  • Not preparing a schedule.
  • Not preparing a detailed allocation of responsibility and timeline table.
  • Not keeping it as short as possible.
  • Not keeping it subject to the implied covenant of good faith and fair dealing (i.e., Buyer's reasonable discretion)
9. Representations and warrantiesNot getting enoughGiving too many, too broad, and not "AS IS, WHERE IS"
10. Liquidated damagesNot thinking before you decide (In declining market, you may want; in rising market you probably do not).Not thinking before you decide (In declining market, you may not want; in rising market you probably do).
11. (Bonus!) Arbitration provisionNot thinking before you decide. Usually, buyers don't want.Not thinking before you decide. Usually, sellers want, to avoid tying up property forever.