Australian homebuyers are being urged to take a closer look at their property contracts, with experts warning that many sales agreements contain ‘high-level red flags’ that could derail purchases or cost buyers thousands.
The warning comes amid an increase in complex clauses, inconsistent disclosure requirements and tightened supplier terms in multiple states and territories.
Check the contract carefully. Image: iStock
Ian Perkins, founder of digital contract review platform BuySecure, said the shift was undeniable – and increasingly dangerous for ordinary buyers.
“We see contracts with errors, omissions or one-sided clauses that buyers simply don’t see,” Perkins said.
“A wrong name, a missing disclosure or a vague special condition may seem harmless, but it can completely change the deal.”
Perkins said buyers often assumed contracts were standard when they were not.
“Every jurisdiction has different rules and every seller has different motivations,” he said.
“A single clause can shift thousands of dollars of risk to the buyer.”
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Perkins said the complexity of modern real estate contracts means that even small mistakes can have major consequences.
“We have seen contracts where the smallest mistake, such as a missing certificate, an unclear settlement clause or a GST error, can derail financing or delay settlement,” he said.
“Buyers are forced to sign quickly, but the fine print is becoming increasingly complex, which can be a dangerous combination.
“But technology gives buyers a chance to immediately identify these issues and explain them in plain English, so buyers can make an informed decision about whether to proceed with the purchase.”
Ray White auctioneer Haesley Cush took this photo of just one Seller Disclosure statement in Queensland
Perkins said buyers should never 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 hood, don’t buy a house without checking the contract.”
BuySecure contract reviews or conversations with a carrier will help quickly identify the potential red flags, Perkins said.
The warning comes after Verve Property buyer Lisa Evans said buyers were making life-changing mistakes in the heat of the moment just to secure a home in the heated property market.
Lisa Evans, purchasing agent of Verve Property. Image supplied.
Evans mentioned the FOMO (fear of missing out) tax and said the most dangerous trend she saw emerging was the “reckless, unconditional offer.”
“To compete, buyers are waiving building and pest inspections or financing clauses after just a 15-minute walk,” she said.
“They bet more than a million dollars on a whim and treat the largest purchase of their lives with less care than they would if they were buying a used car.
“If a buyer sees thirty people at an open house, they immediately assume the property is worth $50,000 more than it actually is.
“This paranoia leads to hasty, unconditional offers without any ‘forensic’ homework. Essentially, they pay a ‘FOMO tax’ just to stop the dreaded weekend crawl.”
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Top 10 Red Flags for Contracts
1. Incorrect identification of the lots or goods: Errors in names, title references, lot/plan numbers or missing easements can delay settlement, complicate financing or even void the contract.
2. Unclear price, down payment or payment terms: Uncertainty around the timing of the deposit, release terms or access to funds can expose buyers to financial risk.
3. Limitations or exclusions for cooling: The cooling-off right varies widely in Australia and can be shortened, waived or excluded entirely. Buyers often assume that they can “change their minds,” when this is not legally possible.
4. Inadequate or inaccurate disclosure by the seller: Disclosure requirements vary by jurisdiction. Missing or incorrect certificates, reports or statements can mask problems that later become the buyer’s problem.
5. Missing or weak contract terms: Financial, construction and pest clauses or due diligence clauses are not standard 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 settlement dates and adjustments: Settlement periods vary and may be related to other events. Poorly drafted adjustment clauses can pass on unexpected costs for rates, water, strata or even land tax to the buyer.
7. Unclear risk and insurance obligations: Risks can shift between sellers and buyers at different stages depending on the jurisdiction and special circumstances. In some states, this occurs at a contract exchange, where buyers are required to immediately obtain homeowners insurance to avoid exposure if damage occurs before settlement.
8. Risky or one-sided special conditions: Special terms take precedence over standard terms and may revoke warranties, limit due diligence, or shift all risk to the buyer. A single clause can fundamentally change the contract.
9. GST Uncertainty: Whether GST applies and whether it is included in the price can significantly affect the final cost. Mistakes here, including whether to withhold GST, can lead to unexpected liabilities and outcomes.
10. Vacancy and rental problems: Contracts should clearly state whether the property is sold empty or with tenants. Overlooking lease terms, expiration dates or bond information may delay settlement or prevent the intended use.
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