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Because your home is going to take some time to sell (as in, it's not "hot" in your market) and the buyers who want your home may have a home to sell that is "hot" in their market. Sooo... why turn away a buyer when you already know your house won't fly off the shelves?
There. That's a good reason for accepting a contingency.
The reality is that not all buyers can buy until they sell. If you have a home in a market where homes like yours have multiple offers the first day/weekend/week they list, then you absolutely shouldn't entertain a contingency if you have other buyers who are not encumbered.
But... if your house is in a slower-moving market segment and you get an offer after a week or two and it is with a contingency, maybe it's worth considering.
Why is that so odd?
Well to answer your question it does still seem "odd" ( your word) to accept it based on the rationale of the buyer in a hot market and the seller not in a hot market. It seems that when the buyer sells his house fast because he is in a hot market then the seller's house, whose home he wants bad enough to place an offer, even as a contingency, in the slower market, will still be available. Of what benefit to the seller is a contingency contract? Are you saying the contingency is written as ironclad that the buyer MUST buy that house when his sells?
Perhaps this is a generational thing that I am just not understanding, because I have lived through many different types of RE cycles ( I bought and sold in a period when it was a time to celebrate if one could find an 11% interest rate and not a 14% as the going rate), hot and cold etc and, again, it just does not seem prudent to add a layer of complication for something with no benefit to the seller.
To, Moby Hick, regarding the type of offer or price point of the offer: the seller can accept or deny any offer, based on price or counter, so the practice of contingencies such as this,( unless a buyer who has placed it is OBLIGATED to buy my home whenever they can do so),
again, truly does not make sense, to me as a seller.
So I am still baffled as to the wisdom of accepting this. I am also baffled as to why I am being perceived as stupid for not understanding this as being beneficial to any seller. Maybe I do not understand the clause or practice, or legalities correctly? In my original post I outlined what I saw AS CONS...Are they incorrect or is there some level of assumed knowledge that I do not possess?
Last edited by corpgypsy; 05-09-2016 at 11:47 AM..
The benefit is that the buyer is psychologically locked in to buying your home. He will begin to invest in the purchase with the inspection and appraisal. If you have a kick-out clause, you can still sell the house out from under this first guy is someone comes along with a full price offer.
So in a buyer's market (houses are slow to sell) it is a reasonable accommodation. In a seller's market (houses are selling quickly) it would probably be upset by a new buyer pretty quickly.
My concern always was, that the house may not be perceived as on the market ( to other agents and the public)with that big contingency label, and I might lose valuable time and other buyers while the buyer tries to sell his.
The obvious benefit is a sale.
"Pay to Play"
As I told my clients, you make them "buy" the contingency with a nice nonrefundable deposit.
You don't just run around handing out free "Contingent on Sale" contracts. You assess the buyer's effort to sell. You clarify if it is a "Contingency to Sell," with a property that may or may not even be on the market, or a "Contingency to Close" and they have a property that is actually under contract and in the contract to closing window.
And, almost all contracts include multiple contingencies that allow a buyer to terminate anyway. A Contingent on Sale (or Closing) contract is just another opportunity to manage and minimize risk to the sellers.
My concern always was, that the house may not be perceived as on the market ( to other agents and the public)with that big contingency label, and I might lose valuable time and other buyers while the buyer tries to sell his.
Exactly.
If you have other offers, go with them.
Many times, the only potential buyers are those who have to sell their homes first. If that's the situation, it may be worth it to agree to the contingency.
Many contingent contracts go through perfectly fine. So all's well that ends well.
But if you are worried it will tie up your home and waste valuable time, don't sign one.
Usually your buyer pool who are homeowners are better qualified than renters. If the buyer puts the "must sell my home contingency clause" in your contract, ask to see your buyer's pre-approval letter and the buyer's buyer pre-approval letter. If your buyer has an iffy buyer for their home, the chances are lower you will sell your home.
The obvious benefit is a sale.
"Pay to Play"
As I told my clients, you make them "buy" the contingency with a nice nonrefundable deposit.
You don't just run around handing out free "Contingent on Sale" contracts. You
And, almost all contracts include multiple contingencies that allow a buyer to terminate anyway. A Contingent on Sale contract is just another opportunity to manage and minimize risk to the sellers.
Believe me, our goal WAS always to get the contract and close.
Ok so it is beneficial to the seller because it manages and minimizes risks...what risks are we talking about, though that are being managed by one's home being "off market" or contingent labeled while a buyer sells his .
Another poster ( Falconhead) asked why I thought the price on a contract offer would be revealed, as I indicated that as a possible risk( for this type of contingency). I had an offer from a buyer on a home, once, that we could not negotiate because of our reluctance to accept the contingency type we are discussing. The next time an offer came in from another buyer we were told that the exact same price was being offered because it was known that we only refused the contingency previously and the price was acceptable. Additionally after selling & purchasing personal homes, more than 10 times, I am never surprised by the confidential information that isn't
,
Last edited by corpgypsy; 05-09-2016 at 12:37 PM..
Reason: clarity
Believe me, our goal WAS always to get the contract and close.
Ok so it is beneficial to the seller because it manages and minimizes risks...what risks are we talking about, though that are being managed by one's home being "off market" or contingent labeled while a buyer sells his .
Another poster ( Falconhead) asked why I thought the price on a contract offer would be revealed, as I indicated that as a possible risk( for this type of contingency). I had an offer from a buyer on a home, once, that we could not negotiate because of our reluctance to accept the contingency type we are discussing. The next time an offer came in from another buyer we were told that the exact same price was being offered because it was known that we only refused the contingency previously and the price was acceptable. Additionally after selling & purchasing personal homes, more than 10 times, I am never surprised by the confidential information that isn't
,
Note that I didn't say that a contingency for the buyer manages or minimizes risk to the seller.
The seller and listing agent work together to protect the seller, or they don't proceed.
MikeJ..^^^^^ That was the point of my thread. Why does a seller accept this as there appears to be no benefit. I see the benefits for the buyer but all or mostly all cons or risks to a seller. So you as a pro are advising against this practice as it really is of no benefit to a seller?
MikeJ..^^^^^ That was the point of my thread. Why does a seller accept this as there appears to be no benefit. I see the benefits for the buyer but all or mostly all cons or risks to a seller. So you as a pro are advising against this practice as it really is of no benefit to a seller?
I see color. You are seeing black and white.
It makes it hard to find common terms.
There is so much more to a productive negotiation than one specific term of sale, there is no possibility I would say there is no benefit, don't ever do it, or there is always benefit, always do it.
The permutations of negotiations are countless, and seldom black and white.
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