Contigency offer...their house is under contract

deaniesueJune 17, 2011

Thought I posted this earlier but I think I never went past preview message. If it's already on here forgive the repost!

Would you take a contigency offer based on the buyer's house selling? It's not scheduled to close until the end of July. Supposedly past the option period and appraisal is scheduled for Monday.

I'm worried about having our house off the market for the bulk of summer if this falls through. I feel like the buyers have no risk and we are taking all the risk. Thoughts? Tips?

Our house has been for sale for about a month. This is our 3rd offer. 1st offer we couldn't come together on price. 2nd offer they cancelled on the last day of the option period (while we got estimates to replace the roof they went new house shopping and decided to build). Now this is our 3rd offer.

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cas66ragtop

Since your house has only been on the market for a month, and you have already got 3 offers - that suggests to me that you have a very desirable house, and it is priced right. If it were me, I wouldn't be interested in a contingency offer. To me, contingency offers only open yourself up to too many problems. Your buyer's buyer may have a contingency as well.

It's a gamble either way. You never know if this buyer is THE BEST (or only) offer you are going to get. You telling them "no" will most likely insult them and make them go away.

You can always accept their offer for now and keep showing the house. Anyone else who comes forward to purchase w/o a contingency can then take the house away from them. But the only bad thing about that - is the realtor will tell other prospective buyers that your house is "under contract". Once people hear that, a lot of them will forget about your house and look elsewhere.

No real answers here. Sorry - its a really tough choice to make. Best of luck to you!

    Bookmark   June 17, 2011 at 9:40PM
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deaniesue

Yes, that is a big concern...that even though we can technically take other offers no one will bother to come look. While the house was AO before we didn't have any showings. Once it went BOM we had 4 showings the following week.

I appreciate the thoughts. I hate all the guessing with selling! I am already in our new house so would really love to be done with having 2 houses and all that it entails.

    Bookmark   June 18, 2011 at 12:07AM
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azmom

What is AO, BOM?

    Bookmark   June 18, 2011 at 5:09AM
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deee_gw

I think AO is active with option. BOM is back on market.

I wouldn't take it. You're right - you are assuming all the risk. You'll be waiting around for six weeks for something that may or may not happen. In our area, everyone is still skittish about the market and transactions fall apart for the craziest reasons.

As you have already experienced, buyers are not going to bother with your house while it's under an option. You could suggest that once your buyers are comfortable with their buyers that they come back and make an offer without a contingency.

    Bookmark   June 18, 2011 at 6:30AM
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rafor

Doesn't seem to me that you'd be assuming any risk. If you get another offer the first buyer has a certain amount of time to remove the contingency (usually something like 48 hours). When we bought our current house, there was an offer already accepted contingent on the buyer selling his house. We had no contingencies in our offer and everything went ahead for us. You just keep the house on the market and keep showing it. Nowadays, given the current market, I wouldn't turn down the offer you have in hand.

    Bookmark   June 18, 2011 at 8:28AM
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deaniesue

Sorry - yes AO is active option. BOM is Back on Market.

Rafor, the problem is I don't think anyone will come look once it's under contigency. There are a LOT of houses on the market in my area that are similar to mine. I think people will just move on and look at something else. My realtor said our showings will go WAY down (and quite frankly we are hardly getting any as it is...it's just that the ones we have gotten have really liked. If we can get them in the door the house is showing very nicely.)

IF we go with this we would have to make some changes on the contract....but as it stands right now they have it written that they get 5 days on the contigency to say "yes" or "no" if we get another offer and if they say they still want the house they have to put an additional "$0" in earnest money. We'll change the number of days to 2 or 3 and they WILL have to put in more earnest money as is standard for this arrangement. I will need to consult with our realtor for what that amount would be.

Ugh, I didn' realize how much "gambling" there would be in sellling.

    Bookmark   June 18, 2011 at 10:40AM
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Sophie Wheeler

No, I wouldn't take a contingency right now. You've barely been listed on the market compared with many DOM to sell. No way I'd put my home in limbo waiting on someone else's deal. That deal might not happen, but what WILL happen is that you will have been skipped over in the interim by most shoppers in the market. Serious shoppers won't waste their time on a home that's got a pending offer unless it's something really spectacular and special.

Tell them you'd be happy to entertain an offer from them when their home closes and move on.

    Bookmark   June 18, 2011 at 12:03PM
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sweet_tea

your situation is that the buyer's home is already under contract and is scheduled to close in weeks. that is a lot better situation for you compared to buyer simply placing their home on the market. They already have a buyer. Now it is just a matter of the sale going through. what are the chances that the deal falls through...maybe 35% chance it falls through?

I normally don't like a contingnecy. However, in your situation, it is only 6 weeks away and there is already a contract on the home in question. I would go with it if i was in your shoes.

You can schedule closing for your place for the day after closing for the buyers's home.

Worse case, the buyers sale falls through. This could occur in a week or in 6 weeks. But there is better than 50% chance that the buyers sale does NOT fall through.

Also keep in mind if you decide to reject this offer, then any future buyers might have issues that cause your sale to fall through, even if there is no home sale contingency.

In your case, I would go with the bird in the hand and take the risk and plan your closing 6 weeks out. the only reason I suggest this is because they already have a buyer and a scheduled closing date. This is HUGE.

    Bookmark   June 18, 2011 at 3:09PM
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deaniesue

Update: Well, we talked to our realtor and we are asking them to give us more information on their contract/buyer. Basically - how far in the process, loan approval, etc. She emailed the realtor a few hours ago and no response yet.

If we lose this offer I am ok with it as it was risky. If they aren't will to give us more information to make us more comfortable with the contigency than it wouldn't be something I was willing to go with, anyway.

Thanks for all the thoughts! I've taken them all to heart. :) I will update if/when we hear back (I hate when people don't do that!!).

    Bookmark   June 18, 2011 at 6:45PM
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deaniesue

Well, we did counter and came up with an offer that we could agree on. Their house has moved into pending status (so it is past the option period). They got an inspection on our house and we haven't heard back anything on that - going with no news is good news. Tuesday is their opt out date should they change their mind. We had shared a copy of the inspection from our previous buyer that fell through (which was less than 2 weeks old) so there shouldn't have been any surprises on the inspection.

So it's just wait and see now.

    Bookmark   June 24, 2011 at 4:59PM
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deee_gw

Thanks for the update. Hope everything goes smoothly.

    Bookmark   June 24, 2011 at 9:17PM
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LoveInTheHouse

Sounds like you did the right thing. Asking for more information and proof about THEIR contract and having a kick-out clause is good insurance. You may get less people looking but really, how many people can go house shopping AFTER they close on their own houses? If you were waiting for that, that would give you less buyers as well. We have to take a chance sometimes. Good luck!

    Bookmark   June 24, 2011 at 11:34PM
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