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San Francisco Home Sale Data

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Liquidated Damages

Liquidated damage clauses exist in some contracts. If a buyer backs out of a deal even though contingencies were satisfied, the seller keeps some or all of the good faith money as liquidated damages. In transactions of higher risk, liquidated damages can serve as a hedge for the buyer against being sued for breach of contract.  The seller would have agreed to keeping some or all of the good faith deposit as their compensation in such a case. 

Good Faith Deposit

If a buyer makes an offer and the seller agrees to it, the buyer will make a good faith deposit of a few hundred to a few thousand dollars depending on the value of the home. In the simplest of terms, good faith money is the buyer saying "I'm serious so here is some money. If I don't follow up and proceed with this deal you -the seller- can keep the good faith money.". By accepting the good faith money, the seller is making a commitment to work with the buyer and to halt any further attempts to sell the property.  The seller may ask for more good faith money if the real estate market favors the seller. Conversely the buyer may offer only a token amount if the market favors the buyer.


Escrow is the "third party place of common custody or trust" where all parties related to a transaction place their documents and funds until the transaction has been finalized.  Escrow is common for any transaction where there are multiple stages and where one stage is dependent on the next.  To ensure that all parties "live up to their end of the deal" the money and documents are placed in escrow until the transaction is finalized.  Real estate is a common place for escrow to be used as the seller is reluctant to transfer ownership without payment and the buyer payment without ownership.

Determining Size and Location, Square Footage, Lot Size, Boundary Lines, and Encroachments

In general, buyers of real property should assume that all statements and indications regarding square footage, lot size, boundary lines, and encroachments are approximations. Before entering into a sale agreement, a buyer should employ a qualified appraiser or land surveyor to determine the exact square footage, lot size and boundaries. San Francisco housing is expensive and a new home buyer should not realize "after the fact" that their property is really 400 square feet less than what they thought or that their building actually extends two feet onto the neighbors property. These types of problems can be costly to resolve and may significantly alter an owners ability to sell the property in the future.  Title insurance policies often have clauses stating that the policy will not cover discrepancies in boundary lines.


Contingencies are the clauses a buyer notes on their offer that state that their offer is valid "contingent" upon the buyer or seller meeting certain expectations. The most common contingencies relate to financing, inspection, and title.