Congrats on your first offer! Now lets dive into the contract and determine if it’s a good offer…
What are the most common and overlooked red flags you should pay attention to when receiving an offer on your home?
As a real estate professional, it’s crucial to help your seller clients look beyond the price when evaluating an offer. Here are the most common and often overlooked red flags to watch out for when receiving a purchase offer on a home:
Most common and Overlooked Red Flags
Weak Proof of Funds or Pre-Approval
Red Flag: The buyer provides an outdated or vague pre-approval, or none at all.
Why it matters: It could mean the buyer isn’t truly qualified, or may have difficulty securing financing.
✅ What to look for: A recent (within 30 days) pre-approval letter from a reputable lender with the buyer’s name and loan type specified.
Unusual or Excessive Contingencies
Red Flag: The buyer includes numerous or unusual contingencies (e.g. sale of another property, long feasibility studies, odd inspection clauses).
Why it matters: Too many contingencies give buyers outs and delay closing.
✅ What to look for: Standard contingencies (inspection, appraisal, financing) with clearly defined timelines.
Low Earnest Money Deposit
Red Flag: The buyer offers very little earnest money (e.g. $500 on a $500K home).
Why it matters: Earnest money shows commitment; a low deposit may indicate a less serious buyer.
✅ What to look for: A typical earnest money deposit is 1–3% of the purchase price depending on your market.
Closing Timeline That Doesn’t Align with Seller Needs
Red Flag: The buyer demands a very quick or very delayed close without explanation.
Why it matters: It could signal a buyer with inflexible needs or financing issues — or one trying to force a fast close before issues surface.
✅ What to look for: A realistic closing date (usually 30–45 days) that fits your move-out timeline or allows for a leaseback if needed.
Seller Pays All the Costs
Red Flag: The offer asks the seller to cover all closing costs, title, and even additional warranties or repairs.
Why it matters: This can cut significantly into net proceeds and signal a buyer with limited cash reserves.
✅ What to look for: A balanced offer where the buyer covers at least their share of customary costs.
Requesting the Property “As-Is” but Still Retaining Inspection Rights
Red Flag: The buyer says they’re buying “as-is” but reserves the right to negotiate repairs after inspection.
Why it matters: This can lead to bait-and-switch renegotiations.
✅ What to look for: Either a truly as-is deal with a short inspection window or a clear understanding of what “as-is” means in writing.
Inexperienced or Non-Responsive Buyer Agent
Red Flag: The buyer’s agent is hard to reach, disorganized, or doesn’t communicate clearly.
Why it matters: A disorganized agent can derail timelines or overlook important deadlines, leading to a failed deal.
✅ What to look for: A cooperative, professional buyer’s agent who understands the process and keeps the deal moving.
Buyer History or Reputation (if known)
Red Flag: If you’ve heard through other agents that the buyer has backed out of multiple deals or is difficult during inspections or appraisals.
Why it matters: Past behavior is often a good predictor of future drama.
✅ What to look for: A buyer with a clean offer history and solid agent representation.
Who pays for what during a Texas real estate purchase transaction? (Common practice)
In a Texas residential real estate transaction, the allocation of costs between the buyer and seller is often guided by local customs but can be negotiated. Below is a breakdown of who typically pays for what, but bear in mind that depending on the market conditions (seller’s market vs buyer’s market), any of these items can be negotiated.
Common Buyer-paid costs
Loan origination & lender fees- Paid directly to the lender
Appraisal- Paid by buyer to lender; typically required by lender
Home inspection- Buyer pays inspector directly
Survey (if buyer is required to obtain new one)-Only if seller does not provide acceptable survey
Title insurance endorsements (lender’s)- Optional and lender-required endorsements are usually a buyer expense
Homeowner’s insurance- Required by lender, paid by buyer at closing
Escrow account setup (taxes & insurance reserves)- Collected by lender at closing
Credit report fee- Typically paid by buyer to lender upfront
HOA Resale Certificate Fee-Buyer pays if box (2) is checked in contract — common in condos or HOA homes
Title Policy (if negotiated as buyer’s responsibility)- Not typical in Texas, but negotiable
Recording fees (buyer’s side)-Customarily a buyer expense
Attorney fees (if used)- Optional, paid by the party who hires the attorney
Common Seller-paid costs
Owner’s Title Policy- Customarily paid by seller in Texas
Broker commissions- Paid as per listing agreement (not buyer’s contract)
Document preparation (Deed, etc.)- Seller usually covers these fees
HOA Resale Certificate Fee- Seller pays if box (1) is checked in the contract— common in HOA properties
Tax certificates- Typically a seller expense
Survey (if existing one is unavailable or unacceptable)-Seller must provide acceptable survey or pay for a new one
Pro-rated property taxes up to closing- Seller pays their portion through closing date
Home warranty (if agreed to)- Optional — if seller agrees, the amount is entered here
Repairs (negotiated post-inspection)- Seller may agree to make repairs or give concessions
Title company escrow fees (often split)- Customarily split 50/50, but negotiable
Attorney fees (if used)- Optional, paid by the party who hires the attorney
What does a Great Offer look like from the view of the seller?
When you’re reviewing offers with your seller using the TREC 1-4 Family Residential Resale Contract, a “great offer” goes well beyond price alone. Here’s how a top-notch real estate agent would break it down section by section to highlight what makes an offer strong, clean, and likely to close:
Paragraph 3- Sales Price
Solid Offer: Full-price or above asking, or close enough with other strong terms.
Cash offer or strong financing with substantial down payment (e.g., 20%+) makes it more appealing and less risky.
Paragraph 5 – Earnest Money & Option Fee
Earnest Money: 1–3% of the purchase price — shows commitment.
Option Fee: A fair, non-refundable option fee (e.g., $200–$500 for a 5–7 day option period) indicates seriousness without dragging inspection timelines.
Paragraph 6 – Title Policy & Survey
Title Policy (6.A): Buyer agrees seller will pay for the owner’s title policy (customary in Texas).
Survey (6.C): Buyer accepts existing survey (if available), or agrees to pay for a new one if it’s not.
Paragraph 7 – Property Condition
As-Is Sale (7.D): Buyer accepts the property “as-is” and isn’t demanding upfront repairs.
Inspection Period: Short and clear (within the option period). Fewer renegotiation risks.
Paragraph 9 – Closing Date
A reasonable and realistic closing date (typically 30–45 days out).
Buyer expresses flexibility on a leaseback or seller’s preferred move-out date, if needed.
Paragraph 12 – Settlement Expenses
No or low seller-paid closing costs. The best offers won’t ask you to cover extensive buyer fees.
If seller assistance is requested, it’s reasonable (e.g., “up to $2,000” vs. “up to 6%”).
Paragraph 21 – Notices
Buyer and agent info is complete and accurate — a sign of professionalism and communication.
Paragraph 23 – Termination Option
A short option period (5–7 days) with a healthy fee shows the buyer isn’t planning to back out without cause
Other Important Indicators:
Pre-approval letter (or proof of funds for cash offers) included with the offer.
Buyer is working with a well-known, responsive lender and a professional agent.
Offer is submitted clean, complete, and on-time.
Bonus: Custom Terms that Help Sellers
Buyer offers a leaseback post-closing at no cost to give seller time to relocate.
Buyer agrees to waive appraisal contingency (if value supports it).
Buyer is flexible on repairs or offers to take the property in current condition.
Do you have a question about your offer? Let’s chat
Whether going at it alone, or simply have a general question about an offer, let’s chat about it.
