Brier Grieves April 28, 2016 No Comments

What Are Easy Mistakes to Make When Writing a Real Estate Contract?

Real estate contracts are long and complicated documents. However, a correctly written real estate sales agreement is essential to avoid mistakes and misunderstandings that can cost you money. Today, we want to help answer the question, “What are easy mistakes to make when writing a real estate contract?

A real estate contract is a written agreement and commitment for the conveyance, sale, or exchange of real property. These agreements clearly identify all parties involved, the real estate / property, and the specific terms such as sale price. Who writes these contracts?

  • Realtor Associations — These are “one size fits most” forms used by many real estate licensees who are members of a Realtor Association.
  • Real Estate Brokers — Many national and regional real estate brokerage firms develop their own fill-in-the-blank forms.
  • For Sale By Owner — Generic real estate forms are available from office supply stores and other companies.
  • Attorneys — A real estate attorney will negotiate and write a completely customized real estate contract that conforms to state and federal law.

Of course, while not recommended, individuals representing themselves in a transaction can write their own contract. However, lawyers are the only professionals authorized to write contracts, even the forms used by real estate licensees. A contract is a legal document, and writing one is practicing law. Real estate agents are only authorized to help one fill out fill-in-the-blank contract forms, but lawyers actually write them.

Here is a list of easy mistakes in real estate contracts:


While the “one size fits most” real estate contract forms, used by brokers and salespersons, work in the vast majority of situations, many people make the mistake of not using an attorney when they should. Estate sales, short sales, bank owned and company owned property sales should all have contracts written or reviewed by legal counsel.


Real estate contracts identify all parties involved in the transaction. It is an easy mistake to not use the full name of the buyer and seller. Double-check the spelling of names, and include the mailing address of each. Errors can affect and slow financing, and cause issues at closing.


It may go without saying one should provide the correct address of the property involved in the transaction. Is it “700 5th Ave,” “700 W. 5th Ave, ” or “700 Fifth Ave?” It is possible all are correct. More important is the legal description of the property: Tax ID, Parcel Number, Deed Book, et al.


One should identify the relationship of each party with each licensed real estate broker involved, and include the actual licensee representing each. There are several types of relationships:

  • Seller Agent — The broker and all their agents represent the seller alone.
  • Buyer Agent — The broker and all their agents represent the buyer.
  • Dual Agent — A single broker and their agents represent both the buyer and seller.
  • Designated Agent — The broker is acting as a dual agent, but has designated certain agents to represent buyer and seller separately.
  • Transactional Licensee — Broker and agents assist with the transaction but are not acting as an advocate for either party.

Correct Math

An agreement for the sale of real estate includes the sale price and deposits. It may also include a  mortgage contingency, which the buyer states they will only buy the property if they receive financing with a certain loan amount. One must ensure that the sale price, deposit, down payment, and required financing amount are correct and balance.

  • Purchase Price — The total amount of the sale price.
  • Deposit — Ernest money or good-faith payment offered by the buyer to the seller. This is not the downpayment and appears as a credit at closing.
  • Downpayment — Cash payment offsetting the amount financed.
  • Loan Amount — The financed portion of the sale price using one or more mortgages.

Leaving Blanks

It is tempting to leave blanks on forms when many include default language. For example, there is an option to state how many days, from the execution date of the agreement,  one has to complete inspections. However, if not specified, the form may default to something like 10 days. When the real estate contract states “days,” unless specified, it means calendar days, not business days. Consciously filling in the form helps avoid confusion.

Counter Offers

It is common buyers will provide a completed real estate sales agreement as the offer to purchase. If the seller signs the agreement as-is, they accept the offer. Many times, parties make counter offers by lining out items and writing in changes. If the buyer finds the changes acceptable, they sign and date them. If the buyer disagrees, they can walk away or make a counter offer of their own. This can happen several times.

While this is acceptable and occurs often, it is not a best practice. In order to avoid confusion, misunderstandings, or liabilities from mistakes, do not make handwritten changes to the contract. A clean and typed form, as the final signed contract, protects everyone.

For more information or to talk about mistakes made when writing a real estate contract, please contact us.