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If the contingency is that he doesn't sell his house, then the way I read it he can back out of the offer if it doesn't sell just as if the contingency is obtaining financing and he was unable to qualify for a mortgage.
We once cancelled an offer on a house because the inspection found water damage to one wall and the floor. We wanted the repair work done by a licensed contractor. They wanted to do it themselves. Clearly, they had been trying to do it themselves without success. We got our earnest money refunded.
Perhaps what you need to be talking about is an option contract. In the movie business, producers will option a screenplay or book for a certain length of time to give them time to get their ducks in a row.
As in the movie business, you agree on a certain purchase price. The option money is a percentage of that paid to the seller in return for them promising not to sell it to anyone else for a certain length of time.
When the time period ends, the buyer is not obligated to buy but the seller is obligated to sell at the agreed up on price.
However it turns out, the seller keeps the option money. It's not put in escrow. It is not returned if the deal falls through. I suspect it is generally deducted from the selling price if the purchase goes through.
In movies, it is generally 10% of the agreed on purchase price and some projects have been optioned multiple times.
Say for example, you offer to sell your home to them at $350,000 and you will hold it off the market for 6 months for a 10% option. They pay you $35,000. It is yours, being mindful of needing any of it to pay off your mortgage at closing, of course.
Now the buyer has some skin in the game. If it turns out he can't get it organized in 6 months, you are right where you are now but $35K to the plus.
( last paragraph)...........No, there have been posts started where the OP admitted he had buyers remorse and wanted to back out and still get his upfront money back.
Posters after posters reassured him he would have no problem and even realtors stated it is very rare for a buyer to change his mind and not get his money back.
Thus, I would put as much faith in that contingency contract as I would in a roll of toilet paper.
For all the seller knows, that " buyer" might be out looking at many different houses from today until his house sells.
( last paragraph)...........No, there have been posts started where the OP admitted he had buyers remorse and wanted to back out and still get his upfront money back.
Posters after posters reassured him he would have no problem and even realtors stated it is very rare for a buyer to change his mind and not get his money back.
Thus, I would put as much faith in that contingency contract as I would in a roll of toilet paper.
For all the seller knows, that " buyer" might be out looking at many different houses from today until his house sells.
A contingency contract with earnest money is not the same as an option contract.
The option money is NOT paid back if the deal falls through.
"After this term has finished, the purchaser either exercises his rights under the option and purchases the property at the predetermined amount, or allows his option to expire. Even if the purchaser does not exercise his right, the seller retains the original option fee."
Investors use real estate options to secure high-profit investments at relatively low risk. For example, developers option land to keep it off the market while they work to get the deal together. If they can't get it organized, the buyer keeps the option money and the developers are not stuck with a big chunk of land that they have no use for.
My understanding is that big money real estate deals are often option contracts not contingency contracts. Imagine keeping a 40 million dollar piece of property off the market for six months and then having the potential buyer say, "Sorry," and walk away.
Last edited by GotHereQuickAsICould; 07-02-2014 at 10:39 AM..
An option contract is really what the buyers are asking for. They want the sellers to keep their property off the market for four months while they get their end of the deal together. If they can get it organized, they want to buy the property at a certain price even if the market goes up. If it goes down, or they find another property that suits them better, then they likely will back out of the deal.
They want an option the buy the house and should be paying for the sellers to keep it off the market for those option months.
Realistically, it will probably be six months or more before closing. The sellers can respond with an option contract for four months and negotiate to six months.
Have any of you heard of putting in a counter offer with the requirement for them to list their house within so many days of us signing the contract (if we do)?
You can certainly try to do that but there's no guarantee they would accept that condition.
Realistically, your concern is not so much when they list (obviously you want ASAP) but more a better understanding of their local market i.e. avg DOM for homes in their price range, how much activity has been going on in their area in their price range, avg final sales price so you can ascertain if their price will reasonably be met, etc etc.
If they're listing for $600K but only 2 such homes have been listed in that price range in the past 3-6 months and they both closed well under ask, then you know they will have issues; however, if their market is robust and their price would be competitive with the market, you may feel more confident.
You should really have your realtor research the prospective buyer's local market conditions for you, so you have more information with which to negotiate with them.
They got mad at our 45 day contingency request and withdrew their offer. Oh well, onto the next! Thanks for the info here
That's rich. They got insulted because you didn't want to have your house tied up for 4+ months?
Good luck selling your home; hope you find a qualified buyer soon!
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