Would you accept a contingency offer?

palimpsestJune 29, 2010

If your property had been on the market with little interest for months, would you take an offer like this?

1/There is an existing offer with no contingencies (cash offer) but very low compared to asking price.

The contingency offer is this:

1/Offer is within 10% of full asking and is willing to go within 5% of full asking.

2/Contingent on buyer's sale of existing property within 60 days and immediate (within additional 30 days) closing. Seller can continue to show property and give the contingency buyer 24 hours to respond to a higher offer orwithdraw and allow the seller to sell to the better offer.

3/Buyer's property is "perfect" according to real estate evaluations, but in a development where sales are slow.

My tendency would be to wait a few months to see if the better but contingent offer played out. Most lowball cash offers are "if no one else wants it" with little actual timeframe involved, so may be on the table months later (in my limited experience).

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CaroleOH

I think that is a fair offer. They seller has the option to continue to show the house and if they get a better offer, they give 24 hours notice and the buyer either ups their offer or withdraws.

I don't see any real downside to this proposal for the seller.

    Bookmark   June 29, 2010 at 12:55PM
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palimpsest

The seller is leaning away from it because they are "bird in the hand" in mindset. They would rather get 70 some% of listing price now instead of 90% in two months. Unless they have remortgaged they must own the house outright and they paid much less than the current asking price.

I have looked at houses that people paid $20K for and are listing at $300K and they won't budge. Thats not quite the case here, but the same general idea.

    Bookmark   June 29, 2010 at 3:15PM
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Billl

It doesn't really matter what random joe internet would accept. The seller gets to accept or reject any offer they want. There are lots of reasons a person might prefer a quick sale.

    Bookmark   June 29, 2010 at 4:48PM
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palimpsest

Its a poll to find out the climate of what people are willing to do to sell in this market, not binding arbitration.

    Bookmark   June 30, 2010 at 8:47AM
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zeebee

Were I the seller, I'd take that offer. Clause #2 is quite generous on the buyer's part - giving a relatively short period to sell their own place and allowing me to continue to show mine. Yeah, I'd bite.

    Bookmark   July 2, 2010 at 1:15PM
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brickeyee

The 'kick out' clause that gives the buyer 24 hours to waive the contingency make it pretty safe for the seller, though agents may be more reluctant to show the place if they now there is already a contract.

    Bookmark   July 2, 2010 at 1:46PM
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lyfia

It depends. If I needed to sell now I wouldn't want a contingency clause that is 60 days out and not know if it were to happen or not which would put me out of the summer listing season. I would probably consider the lower offer too.

If I had time and could afford to potentially miss a buyer because they don't want to look at a place that is already under contract then yes I'd do it.

    Bookmark   July 2, 2010 at 2:27PM
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palimpsest

As an update the owners of this property accepted the contingency offer. The realtor was surprised, but its a better offer than the alternatives.

However, it has an immediate kickout clause. They can continue to market and show the house and if a better offer comes in, they can accept it, with no advanced notice to the contingency buyer.

Perhaps, too, the lowball cash offer is something that will still stand at the end of the 60 day contingency offer. My limited familiarity with low cash offers is that they are often "standing" meaning they do not need the house at a particular time and are willing to buy it at any time (within reason) the seller decides s/he is not going to get a better offer.

The seller can assertively try to sell the current property and the only "risk" is tying up a large cash deposit for several months in an escrow account.

    Bookmark   July 6, 2010 at 12:34PM
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