Monday, January 6, 2014

Contingency offers: Good or Bad?


Most agents selling real estate in the last 10 years has received a “contingent on the sale of other property” contract at one point or another. Is it good or bad for your seller client?

Like everything else in a negotiation it just depends on what the property being sold is, How it is priced compared to the market conditions and the terms that are offering.

FACT – The majority of consumers looking to buy a new home will need to sell an existing property to access equity and reduce Loan to Value ratios in order to qualify for a new mortgage. Of course there are exceptions to that statement. Buyers with Cash, someone who may own an existing property outright but most people will need to sell one home to buy another.

So it all comes down to TIMIMG

I urge my clients to look at the offer they receive 1st and once they address any terms that need addressing but before there is a response, then look at the contingent property.

This requires a little more cooperation from the buyer and his/her agent. Once a consumer has found a home they want to buy they tend to get pretty serious about getting their property sold. If the property is one the market and they have an offer that is past the option periods then it is still considered contingent but it is a little stronger than maybe something that is not on the market, not ready for the market and is going to be priced too high for quick contract.

Each situation is unique and I think contingency offers need to weighed just as seriously as non contingent offers. Is there risk for a seller to take a contingent offer? Yes. What if the contingent home does not close on time? You would have signaled to the market that you have a contract on the property but a contingency and it may be dismissed by some other potential buyers. Are there benefits for the seller ? Yes typically you can be a little firmer on price that with someone who may think they can discount you property if paying cash or other favorable terms.

So I would always suggest that the offer be considered as serious as any other offer and treat it was much respect. In 13 years as an Agent I have had only 1 Continent deal fall through and it was a client who was not very honest about the sale of their property. Other than that I have concluded several contingent contracts successfully and when a buyer is in that position I have learned that the presentation of the offer, terms and status of their home sale if handled correctly can be a positive for the selling client.

Let me know if you have any questions.  I appreciate your referrals!!

Send questions to Mobile/Text: 512-922-4922

Regards,

Bob Kenney, Realtor®

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