Help--have an offer contingent on buyer's house selling

odyssey3February 23, 2012

We just got an offer on our house that is the highest we ever had (we are obviously not going to be able to sell it for the price we paid in 2004) but it is contingent on the buyers selling their house many states away. I know this is not ideal, BUT:

Our house has been on the market in a rural area for well over a year, and we have moved away from the state. It is vacant and we have to pay for yardwork and rely on our old neighbors to keep an eye on it. We have had 3 previous offers, one ridiculously low and the other two broke down in negotiation. With this background, we feel we should take this offer, but want to protect ourselves too. What is a reasonable time limit to give them to sell their house? Do we want a kick-out clause? I could really use some opinions.

I have e-mailed our realtor to ask her opinion but haven't heard back from her yet. She just sent us an e-mail with the offer attached, saying it was a good offer and to let her know. That's it. grrrrrr. She's our second realtor too. There has been absolutely no value added by either and I hope I don't have to use one next time I buy or sell a house!

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kats_meow

Does the buyer have a contract on their house?

Even if not, I might take it in your situation if the contingency was only for a short period. That is, I might do it if it was for 30 days but not if it was for 3 months....

    Bookmark   February 23, 2012 at 2:47PM
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odyssey3

No, the buyer has no contract. Their house is "for sale". I would happily wait another 30 days for this deal to work. So give them maybe 30 days to sell their house and 60 to close on our house?

I appreciate your reply.

    Bookmark   February 23, 2012 at 2:51PM
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kats_meow

I would never give that much time. Why on earth would they need 60 days to close? Also the time for them to sell their house should be part of the overall time period. I might give them a total of 45 days from now to closing completed, contingent on them selling their house with you having ability to show house and if get another offer they would have to remove the contingency within X amount of time.

    Bookmark   February 23, 2012 at 3:16PM
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DLM2000

You can accept their contingency with one of your own - your house will remain active in the listings, you (your realtor) will continue to show it and if an offer comes in that is attractive to you, you are not bound to the original contract or your buyer can agree to pull their contingency to maintain their contract with you. We did this years ago. People looking at your home will be told you have accepted an offer with a sale contingency but if they are really interested, they'll figure out a way to make an offer that might appeal to you more. And it's always possible that countering with your own contingency will encourage your buyers to revise their offer. Doesn't sound like your realtor is hungry. When we were faced with this, our realtor gave us detailed info on the contingency sale house and sales information for the area. You can't make a decision about accepting their offer in a vacuum. Your sale is dependent on theirs, so you need to know about that house, that area, current sale time, if they have it priced realistically........

    Bookmark   February 23, 2012 at 3:21PM
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odyssey3

Thank you both for your ideas. The idea of giving them the right of first refusal if I get another offer appeals to me.

I don't think a hungry realtor exist in the rural area I lived in. It's pathetic. My realtor is a lockbox and an MLS lister, that's it. No advice, just forwarding offers. It burns me up that that service cost 3%, no negotiating.

The buyer's house is in NJ. I'll ask her if she can get any info.

    Bookmark   February 23, 2012 at 3:48PM
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sylviatexas1

"Lock box & MLS only" sounds like a limited service listing agreement, in which case you aren't paying for the service you aren't getting.

I wish you the best.

    Bookmark   February 23, 2012 at 4:39PM
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odyssey3

Thanks Sylvia, but this is in no way a limited service listing agreement. 3% is the most a realtor charges on commission in that area and that is what we are paying. I asked if she would come down any on the commission and she told me no, she teaches classes in RE and is worth that commission and never takes less. I'm glad she has thought she's been worth it because I sure haven't. We are definitely paying for the service we aren't getting.

    Bookmark   February 23, 2012 at 5:06PM
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brickeyee

You can counter with a 24 hour kick out clause, but getting anyone to show the listing is hard.

    Bookmark   February 23, 2012 at 5:36PM
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ncrealestateguy

First off, if a property is under contract, it will not be "Active" in the MLS. It will show as "Contingent". And 99% of agents and buyers pass right by those. In fact, most listing searches that buyers are receiving, do not even include Contingent listings. Go figure... I send my clients, Active, Contingent and sometimes recently Expired listings. I am showing two Expireds this Sat. to a buyer.
Every listing is different, but in general, in this buyers market, I advise my sellers that if they want to accept a Contingency like this that we need to speak personally with the potential buyer's agent. You need to be sent comps of the buyers home, find out how long it has been on the market, find out how many showings it is receiving, find out, in the buyer agent's opinion, why it has not sold yet, and then negotiate that if you accept the contingency, the potential buyers will agree to an X% reduction in price every X amount of time. This way you know for sure that it will sell within a certain amount of time.(preferably your contingency period). You need to be forwarded the MLS listing to confirm these price reductions. Your agent needs to stay in communication with the buyer's agent in order to get her feedback on how showings are going for these potential buyers.
Kats Meow, there is no use to accept a Contingency for much less than 45 or 60 days. It takes a normal 45 days to close. And then you have to be reasonable with the time you are willing to give the potential buyers to find a buyer and to let the price reductions work.
A 48 hour kick out clause is pretty normal. This is used in case you get another another acceptable contract. Once you do, you notify the #1 position buyers and inform them that they have those 48 hours to remove their financing contingency. 99% of the time they can not. After the 48 hours is up, you are free to move forward with the the second position contract.
It sounds as though you may be a candidate for accepting a Contingent contract, given that you have been on the market for a long time, and that your property is unique, and that this seems to be the best offer, as far as price, yet.
Please keep us informed on what happens and congrats on the offer.

    Bookmark   February 23, 2012 at 6:28PM
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DLM2000

Mea culpa - I used *Active* in a generic manner that the listing is not expired or the home sold but obviously ncrealestateguy is far more versed in the specifics. That's the kind of representation you need!

    Bookmark   February 23, 2012 at 6:44PM
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odyssey3

Oh, ncreguy, how I wish you were my agent! This is exactly the kind of representation I need and cannot find. I also wish I read your reply earlier.

Here is the latest--my agent said she would put in the 48 hour right of first refusal and could I hurry up and sign the counter offer so she could get it to the buyers this afternoon. So, regrettably, I did. She didn't say any of the things you pointed out and I am feeling sick right now. I didn't see it earlier, but they already had a time limit of June 30 on their contingency. So, if they accept our counter, we are locked in with them until the end of June, prime showing season, with most agents not showing our house.

Is there any kind of complaint I can make against my realtor, like to a licensing board? I asked her in writing for advice and I feel it is negligence not to point out ANYTHING that might have been helpful to me.

    Bookmark   February 23, 2012 at 6:50PM
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odyssey3

I am now searching the MLS myself and I see that there are 3 other houses for sale on their street. Theirs is not even on the MLS yet! Two of the houses have been listed since August and one has been listed since October.

My stomach hurts.

    Bookmark   February 23, 2012 at 6:53PM
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odyssey3

dlm, I assumed that the right of first refusal clause would mean the listing would remain on the MLS. I didn't realize there were different listings like active and contingent. :( I didn't get it but thanks for trying to warn me.

    Bookmark   February 23, 2012 at 7:02PM
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ncrealestateguy

Odyssey,
you are not under contract yet! Call your agent now if you feel like you need to and let her know that you want your counter offer added onto.

    Bookmark   February 23, 2012 at 8:11PM
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rafor

If you put in a 48 FROR clause how are you locked in until June?

We purchased just such a house 2 years ago. The sellers had accepted an offer where the buyer had to sell their house first. We offered a cash purchase price and their previous offer had 48 hours to clear their contingency and continue with the purchase. They couldn't, so we got the house.

    Bookmark   February 23, 2012 at 8:16PM
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ncrealestateguy

Odyssey (Boy, that is a hard word to spell),
What part of the Country do you live where the normal commission is only 3%. So, each agent, the listing agent and the buyers agent has to split this at 1.5%? No wonder she was unwilling to come down on that.

    Bookmark   February 23, 2012 at 8:23PM
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odyssey3

I do have a call into her and am waiting to hear back! If the listing can remain active, I'm OK.

By "locked in" I mean we could be locked in to having a "contingent" MLS listing until June and not an "active" one.

Thanks for all the help!

    Bookmark   February 23, 2012 at 8:24PM
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odyssey3

Oh no ncreguy, her commission is 3% and then we also pay the buyer's agent 3%, so 6% total. Our house is in the SE, like you. Is 6% the norm for NC?

    Bookmark   February 23, 2012 at 8:27PM
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ncrealestateguy

Yes Mam,
6% is the norm. Here in our MLS, it is a violation to keep a property showing Active when it is under a Contingency contract. I am sure your agents MLS is the same. Even if she would go against the rules, chances are the buyers agent would call your agent out on it quickly. So would every other agent that goes to schedule a showing on an "Active" property, only to find out that it is under contract.
Let us know how it goes. Good luck.

    Bookmark   February 23, 2012 at 9:12PM
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odyssey3

My agent just sent me an e-mail in response to me asking her to specify that my listing remain active in the mls because most agents do not bother to show contingent listings. Her response is "We will put in as RRF, which means right of first refusal to other agents. They understand that means they can still show and sell it." I have replied that I am reading online that 99 percent of agents do not bother to show RRF listings so can't we leave it active?

Oh, I have just heard back from her and she is saying "That is not true as far as I know. All good agents show homes that match their buyers needs. They know most people can not take a contingency off in 48 hours. I've sold many RRF houses. But no we can not leave it active."

Is this true??? I don't know what to think right now. I don't know if my agent is being truthful--it goes against what you all are telling me. Advice?

    Bookmark   February 23, 2012 at 9:19PM
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odyssey3

Oh, ok, thanks ncreguy. Looks like we cross posted. Then the listing can't be made active, that is accurate.

OK, need to see about adding onto the counter now.

Thanks for sticking with me here!

    Bookmark   February 23, 2012 at 9:22PM
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ncrealestateguy

We do not use the term RFR here... only Contingent. MAybe agents are more inclined to show RFRs in your neck of the woods.
Did you ask her to do any research on the buyer's home that is for sale? After all, this is more important than what status it changes to.
Also, what did you mean by this:

"OK, need to see about adding onto the counter now."

    Bookmark   February 24, 2012 at 7:31AM
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odyssey3

I meant we should add contingencies of our own, like you suggested, such as the buyers drop the price of their house every X days.

Yes, she is saying she will get back to me with more info about their house. Am waiting to hear.

    Bookmark   February 24, 2012 at 11:10AM
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odyssey3

So I am wondering how long I wait to get info back on the buyer's house? Our counter offer is still out there until 5 pm with no contingencies. Sigh.

    Bookmark   February 24, 2012 at 2:28PM
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berniek

What about the financing and inspection deadline dates?

Here is a link that might be useful: Drafting Kick-Out Clauses to Accept a Better Offer

    Bookmark   February 24, 2012 at 2:51PM
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odyssey3

My agent just notified me that they accepted the counteroffer, so we are under contract. Her reply to my request for info about their house is that it will go on the MLS on Mon or Tues and should sell quickly because it has a first floor master bedroom, which is rare for the area. This is what their agent told my agent. My agent has done absolutely no independent research about market conditions for their house. She didn't even tell me the price. :(

    Bookmark   February 24, 2012 at 3:13PM
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odyssey3

There is no financing clause in the standard kick-out clause my realtor added. They have 10 days from closing to get an inspection.

    Bookmark   February 24, 2012 at 3:16PM
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odyssey3

Feeling better about the contract--my agent said there are two showings just scheduled for tomorrow even though it shows as RFR now. I'm relieved it seems to be being shown.

    Bookmark   February 24, 2012 at 4:30PM
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