What Are Red Flags in a Real Estate Offer I Should Watch Out For?

Weak or Missing Pre-Approval

A pre-qualification letter and a pre-approval letter are not the same thing. Pre-qualification is based on what a buyer tells a lender without verification. Pre-approval involves actual documentation review. If the buyer submits a letter from an online lender that says pre-qualified, that is not the same as a solid pre-approval from a local lender who has reviewed their finances.

Ask your agent to contact the buyer's lender and verify the quality of the approval before accepting.

Very Low Earnest Money

Earnest money is the buyer's skin in the game. A buyer offering $1,000 on a $700,000 purchase has very little to lose if they back out. In the Highlands Ranch market, earnest money of 1% to 2% of the purchase price is typical. Significantly less than that is worth noting.

Unusual or Excessive Contingencies

Contingencies give buyers a legal way out of the contract. Standard contingencies include inspection, appraisal, and financing. An offer that adds a home sale contingency, unusual inspection demands, or non-standard termination rights carries more risk of not closing. Evaluate what each contingency allows the buyer to do before you sign.

Unrealistically Short Inspection Period

Some buyers use a very short inspection period to appear more competitive, then extend it through the resolution process anyway. Others use a long inspection period as a backdoor to renegotiate long after you expected the deal to be firm. Understand what the inspection timeline means in the context of the full contract.

Buyer Who Has Not Seen the Home

Offers from buyers who have never seen the property in person can fall apart after the first walk-through. If the buyer is out of state, remote, or relying entirely on video or photos, the risk of a termination based on condition objections is higher than normal.

Overly Complex or Non-Standard Terms

Offers with unusual addenda, complex contingency structures, or terms that deviate significantly from the standard Colorado contract should be reviewed carefully. Non-standard language can create ambiguity that is hard to resolve cleanly if a dispute arises.

The Offer That Feels Too Good

Occasionally an offer will come in significantly above asking price with a very short inspection period and no contingencies. This is not always a problem, but it warrants a closer look. Confirm the buyer has the financial capacity to support the price and understand their motivation.