Common contract mistakes in finding home buyers and costing them thousands

Aussie homebuyers are being urged to scrutinize their property contracts, with experts warning that many sales agreements contain “high-level red flags” that could put off buying or cost thousands of buyers.

The warning comes amid an increase in complex clauses, inconsistent disclosure requirements, and tougher conditions for sellers across many states and territories.

Ian Perkins, founder of digital contract review platform BuySecure, said the change was inevitable – and increasingly dangerous for everyday consumers.

“We see contracts with errors, omissions or one-sided clauses that consumers simply don’t see,” Perkins said.

“A wrong word, missing disclosure or unclear special status may look harmless, but it can completely change the deal.”

Perkins said that consumers often think that contracts are standard and they are not.

“Every jurisdiction has different rules, and every seller has different motivations,” he said.

“One clause can change thousands of dollars in risk to a consumer.”

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A couple earning $200k a year with a flatpack in the back

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Perkins said the complexity of modern real estate contracts means that even small oversights can have big consequences.

“We have seen contracts where the slightest oversight, such as a missing certificate, an unclear payment clause, or a GST error, can disrupt finances or delay payment,” he said.

“Consumers are being pushed to sign quickly, but the fine print is becoming increasingly difficult, which can be a dangerous combination.

“But technology gives consumers a fighting chance by identifying these issues quickly and explaining them in plain English so that consumers can make an informed decision about whether to proceed with the purchase or not.”

Ray White auctioneer Haesley Cush took this photo for one of the Seller’s Disclosure statements in Queensland

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Perkins said consumers shouldn’t sign a contract they don’t fully understand.

“A property contract is often the most expensive document most Australians will ever sign,” he said.

“If you wouldn’t buy a car without looking under the bonnet, don’t buy a house without looking at the contract.”

A review of the BuySecure contract or discussions with the shipper will help identify potential red flags quickly, Perkins said.

The warning comes after My Verve Property buyer’s agent Lisa Evans said buyers were making mistakes in the past to find a home in the hot property market.

Lisa Evans, buyer’s agent for My Verve Property. Image provided.

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Called the FOMO (fear of missing out) tax, Evans said the most dangerous trend he saw growing was “the unconditional promise”.

“In order to compete, buyers give up property inspections and pest or financial conditions after 15 minutes,” he said.

“They bet more than a million dollars on their own accord, treating the purchase of their lives with more carelessness than they would spend on a used car.

“When a buyer sees 30 people at an open house, they immediately think the property is worth $50,000 more than it really is.

“This confusion leads to immediate, unconditional offers without any ‘forensic’ homework. “In effect, they pay the ‘FOMO Tax’ to stop the dreaded weekend crawl.”

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Top 10 Contract Red Flags

1. Misidentification of parties or property: Errors in names, title references, lot/scheme numbers or missing compensation can delay compensation, complicate payments, or invalidate the contract.

2. Unclear price, deposit or payment terms: Uncertainty about deposit timing, withdrawal conditions or access to funds can put consumers at financial risk.

3. Limitations on cooling or exclusions: Cooling off rights vary widely across Australia and can be shortened, waived or removed altogether. Consumers often think they can “change their mind” when they legally can’t.

4. Inadequate or incorrect seller disclosure: Disclosure obligations vary by jurisdiction. Missing or incorrect certificates, reports or statements can hide problems that later become the buyer’s problem.

5. Absent or weak contractual conditions: Financial, construction and pest control clauses, or due diligence are not common everywhere. In some states, buyers must negotiate this before signing or during the cooling off period – or risk being locked into an unconditional contract.

6. Unclear payment dates and adjustments: Payment times vary and may be combined with other events. Poorly drafted repair clauses can change unexpected costs of rates, water, utilities or land tax to the buyer.

7. Implicit risks and insurance obligations: Risks can vary between sellers and buyers at different levels depending on location and special circumstances. In some states, it goes through the exchange of contracts, requiring buyers to arrange construction insurance immediately to avoid exposure in the event of damage before payment.

8. Special risk or one-sided conditions: Special conditions override general terms and may remove warranties, limit due diligence, or shift all risk to the buyer. One clause can change the agreement.

9. Uncertainty of GST: Whether GST is applicable and whether the price includes it, can affect the final cost. Mistakes here, including whether GST should be withheld, can lead to unexpected debts and consequences.

10. Problems of property and empty dwellings: Contracts should clearly state whether the property is being sold vacant or with tenants. Exceeding lease terms, expiration dates or bond details can delay compensation or prevent intended use.