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name is Mark and I live in northern Kentucky. We own 2 homes and trying desperately to sell one of them. After being on the market for 3 months we got an offer through our realtor who was also representing the buyer.
Basically the buyer had an offer on their house and made an offer on ours contingent on their house closing. The contingency reads:
Successful closing of house on ___ address printed ___. Scheduled to close 4-26-2012. So our realtor is a dual agent here, representing both us, the buyer, and the buy as a seller of their house. His experience tells him this is a done deal, but the closing contingency needs to be there in case something happens.
We negotiate over price and then sign with the above contingency plus contingent in the buyer getting a 'VA first mortgage loan' at a certain rate.
Fast forward 3 weeks and the appraisal of their property comes in low, way low, unreasonably low. The initial buyers have not pulled out yet but obviously they won't be approved for a loan, and our buyers probably won't close and/or won't be able to obtain a mortgage for our house.
I am giving them 24 hours more for some kind of concrete resolution, but my realtor is explaining to me we will have to inform anyone who wants to make an offer that we are still pending with a distressed offer that "may" not happen. I know this because, low and behold, my realtor got a cold call today for a showing this evening. It's probably wishful thinking that, in this market, they will make an offer, but I want to be prepared.
I do not want to make enemies, the buyer is under extreme duress here, but, financially, we need to make a move. What are my rights here? Do I have to wait until the actual failure to close on the 26th of April? I would rather ask to terminate the contract in 24 hours and not be under some cloud for the next 26 days.
Thanks for any help or suggestions.
Last edited by Tolakram; 04-04-2012 at 12:36 PM..
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It all comes down to the terms of your contract. Usually, an offer contingent on a buyer completing a sale of their home will have additional terms that include how long the buyer has to remove the contingency if a backup offer is accepted. If they can't follow through, then the contract would be canceled in favor of the backup offer.
You can't arbitrarily terminate the contact in 24 hours unless that was allowed by your contract. If not, then the buyers would also have to agree to the termination. From just what you wrote, you would likely have to wait until 4/26, but review your contract with your agent to be sure of the terms.
And this is another example of why you don't want to use the same realtor on both sides of the transaction. A good realtor, who was truly representing YOU, would have looked at the comps on this other house and said that it would never appraise for the asking price.
And this is another example of why you don't want to use the same realtor on both sides of the transaction. A good realtor, who was truly representing YOU, would have looked at the comps on this other house and said that it would never appraise for the asking price.
I have to be fair. A lot of people have looked at these comps and it appraised at least 15K lower than it should have. It's a tough market, so IMO almost impossible to say if this is a reasonable appraisal or not based on the slower sales in the area. I agree, it would have been nice to get a true second opinion.
Technically you can't terminate before the day of the contingency on 04/26.
You need to have a frank discussion with your agent about the buyer terminating if they cannot move forward with the purchase of the house.
Or I would highly encourage you to call the buyer and have a heart to heart if your agent is getting in the way. If the buyer can't move forward, they should have the decency to terminate and free you to do something different.
Technically you can't terminate before the day of the contingency on 04/26.
You need to have a frank discussion with your agent about the buyer terminating if they cannot move forward with the purchase of the house.
Or I would highly encourage you to call the buyer and have a heart to heart if your agent is getting in the way. If the buyer can't move forward, they should have the decency to terminate and free you to do something different.
Maybe not. Out here the buyer has 2 business days to renegotiate after a low appraisal or the contract is automatically terminated and EM returned to the buyer. We don't like limbo situations out here. The OP needs to read their contract and see what it says.
Thanks for all your input. In the latest twist, the buyer of our home has gotten a pre-approval letter for a VA loan that does not require them to sell their current house. I am requesting the closing contingency be removed and replaced by the standard pre-approval contingency, plus a contingency that our closing must happen by April 30th or the contract cancels.
Right now the pre-approval states the closing date is still set at April 26th.
This should all be signed by the buyer tonight and by us sometime tomorrow. See any issues with this?
Thanks for all your input. In the latest twist, the buyer of our home has gotten a pre-approval letter for a VA loan that does not require them to sell their current house. I am requesting the closing contingency be removed and replaced by the standard pre-approval contingency, plus a contingency that our closing must happen by April 30th or the contract cancels.
Right now the pre-approval states the closing date is still set at April 26th.
This should all be signed by the buyer tonight and by us sometime tomorrow. See any issues with this?
The appraisal on a VA loan can take longer than usual. I would get it done ASAP if it's not already done.
Thanks for all your input. In the latest twist, the buyer of our home has gotten a pre-approval letter for a VA loan that does not require them to sell their current house. I am requesting the closing contingency be removed and replaced by the standard pre-approval contingency, plus a contingency that our closing must happen by April 30th or the contract cancels.
Right now the pre-approval states the closing date is still set at April 26th.
This should all be signed by the buyer tonight and by us sometime tomorrow. See any issues with this?
The big what if has been removed (the selling of their house) so get that out ASAP. As far as the closing date yes put one in but that could get delayed by slow paper work so be prepared to give somewhat on that.
Hope all goes well.
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