Trending Real Estate Contract Terms

As the real estate market shifts from a hot sellers' market to more of a buyers' market, so do the terms we see in the sales contract. For the most part gone are the days of dozens of offers the first day on the market and way over asking price offers. In a hot sellers' market, buyers found themselves in some stiff competition and paying sky high prices to win a contract. But, what are we seeing now that the buyers are getting back in the driver's seat?

Contingencies, contingencies, contingencies. That's what you can expect to see in sales contracts right now. Not long ago, buyer's were waiving any and all contingencies, but now they're all back. Financing, appraisal, and inspection contingencies that were standard last year are all back, and they've brought with them a few lesser seen contingencies including the sale of the buyer's home contingency.

Another oldie but goodie making a comeback is the seller concessions where buyers ask sellers to pay some of their closing costs. These concession requests are typically 3-6% of the purchase price. Buyers are also asking for credits for major updates like a new roof and/or interest rate buydowns where the seller is basically paying points for the buyer to help them get a more affordable interest rate.

Buyers are also trying to be more creative with financing options now that they have more leverage. There are many more requests for assumable loans to help buyers get that lower interest rate most seller have on their current mortgages. Assuming the sellers' loan isn't typically an option, however, and the buyer would still have to find a way to pay the difference between the loan balance and the sale price making this a not often used option. Owner financing is another creative solution if the seller owns the property free and clear.

Other terms we aren't seeing in the current market include escalation clauses, post-closing occupancy by the seller, buyers paying seller closing costs, and signing bonuses.