Selling Home with Conditions

[JOHNNIE36]

We currently have our home listed for sale with a real estate agency. We have one interested party that might want to buy our home but the offer to purchase is sure to have contingencies. Like, "we'll buy it for this price contingent on our home selling" and "the closing to be within 30 days after our closing".

Based on this info, we may accept the offer but keep our home on the market and the original purchaser has first right of refusal. I don't know if the purchaser has to sell their home in order to buy ours or what their financial situation would be, but I hate "purchases" like this.

Tell me the pitfalls and what I should be looking for. Should I just forget these buyers and continue to look for someone else? Accept their offer and throw in some deal breakers? They will be viewing it again this weekend for the fifth time.

Editing to add that we have already purchased another home and will be moving in two weeks. It might be better to show our home empty rather that with all the furniture as it might appear to be crowded. So our home will be sitting here empty and available for showing to any prospective buyers.

 

[heeyy_joe]

40% of deals right now are all cash deals. I'd tell these folks to come back when they have an offer without a sale contingency.

 

[pb4uski]

We've done that in the past both as buyer and seller. Ours was structured as we signed a P&S with them with a contingency that they sell their home but that we had the right to continue to market our home and offer it for sale. If we received an offer without a sale contingency then the buyers had 24 hours to decide to waive the contingency and proceed to closing. If they failed to waive the contingency then we had the right to accept the other offer and their contract would be voided and their deposit would be returned.

Something along those lines as I recall. it was a slam dunk for us as a contingent deal was better than none and there was nothing to be lost. As it turned out after 3 or 4 months they were unable to sell their house and the whole deal fell through.

 

[Derslickmeister]

Not sure where your home is but here in the DFW metro mess the market is on fire. I would not waste much time on these folks because as a previous poster said 40% of deals going down now are cash deals.

 

[RockyMtn]

I would say that it would depend on the real estate market in your area and how long it had been for sale.

Good market and been on the market for short time I would not take an offer with contingencies. Bad market and the house has been for sale for a while I would consider it as long as you had the right to continue to market the property and take a better offer if one comes along.

 

[kypix]

Are the buyers local? How salable is their home? Is it on the market now? If not, why not? Why do they need to delay the closing until 30 days after their home closes?

I am a broker. If your agent tells me there is a first right on your home, I probably won't show it. Why get my buyers interested when there is another contract in place?

Once you accept the first right your agent may not be as aggressive in marketing your home. No reason to spend money advertising when there is a contract.

Just a few things to consider. Good luck.

kypix

 

[haha]

We currently have our home listed for sale with a real estate agency. We have one interested party that might want to buy our home but the offer to purchase is sure to have contingencies. Like, "we'll buy it for this price contingent on our home selling" and "the closing to be within 30 days after our closing".

Based on this info, we may accept the offer but keep our home on the market and the original purchaser has first right of refusal. I don't know if the purchaser has to sell their home in order to buy ours or what their financial situation would be, but I hate "purchases" like this.

Tell me the pitfalls and what I should be looking for. Should I just forget these buyers and continue to look for someone else? Accept their offer and throw in some deal breakers? They will be viewing it again this weekend for the fifth time.

Editing to add that we have already purchased another home and will be moving in two weeks. It might be better to show our home empty rather that with all the furniture as it might appear to be crowded. So our home will be sitting here empty and available for showing to any prospective buyers.

They know where you are, and that you require a cash-out. They will be able to find you when they become qualified buyers.

Ha

 

[phil1ben]

I am sure that you want to sell your home. However, offers like these only work to your detriment and the Buyer's advantage. What it gives them is simply an open option on your house. By way of example, they may receive an offer on their house and determine not to accept it because they don't want to proceed to buy your house or have located another house. You on the other hand are tied up with a right of first refusal. You are substantially impaired by this scenario and they are substantially benefited. Never a situation I want to be in.

As stated above, it also deters realtors from showing your house. By the way, if your house has been on the market for a while, don't be afraid to change realtors when the listing expires and negotiate very specific advertising requirements with the new realtor. The commission is negotiable but be sure that the realtor that brings the Buyer gets a full 3% commission. Only negotiate for a reduction of the listing realtor's commission and specific advertising obligations.

 

[Travelwanted]

1-Agree with phil1ben

2-furnished homes generally sell faster than empty ones

 

[Another Reader]

Vacant homes show all their blemishes. Try to leave enough furniture to give potential buyers a sense of how the floor plan works. Also some decorations that are neutral and tasteful so the eye is drawn to them.

Contingencies used to be common years ago when people were transferred a lot and everyone moved at the end of the school years. Agents understood this and worked with them. The market is different now, and I would avoid a contingency. It's likely the potential buyer can't sell their house at the price they need to buy yours.

How long has your house been on the market? When a weak contingent buyer is the only person making an offer, your house is probably overpriced. Sit down with the agent and review the comparable sales and your competition. It could be time for a price reduction.

 

[bizlady]

I would not accept- your home will be under contract and other realtors may not show- and you know nothing presumably about their home.

Homes show better with furniture- buyers cannot envision space. If you move, hire a stager- worth the money.

 

[Bestwifeever]

The potential buyer has looked at the house five times and is likely to have contingencies on an offer. That sounds like a waffler who might not actually want to move or is playing you. Does your realtor think this is a serious buyer or that a contingency offer will affect other offers (it sounds like it benefits only the offerer and not you)?

Good luck!

 

[Dash man]

I agree with most to not accept the contingency, but if you do be sure to put a time limit on it. 30 or 60 days at most.

 

[crtreedude]

Require a hefty deposit that doesn't return to them if they back out. (I don't know if you can do that, just an idea)

 

[Midpack]

May not help, but we made an offer on a house only to find out someone already had an offer with right of first refusal on it, and the other buyer reportedly bought the house. We were emotionally invested in the house obviously so we were [-]pissed[/-] very disappointed at the time, never knew about the other offer until we made our offer (so experienced realtors do show himself with contingent offers sometimes at least).

And staged homes are usually easier to sell than empty homes. That doesn't mean you should leave all your belongings in place, you want to remove all clutter and personal stuff, and leave enough tasteful furniture/accessories to help buyers envision the space for it's intended use. You might be surprised how many buyers just can't envision how they will live in the rooms if they're all empty. And furniture helps reassure them what will reasonably fit in each room.

 

[Midpack]

Require a hefty deposit that doesn't return to them if they back out. (I don't know if you can do that, just an idea)

Who would sign up for that? No one I suspect...

 

[crtreedude]

Who would sign up for that? No one I suspect...

That is why I put it as a question, I know here in Costa Rica a deposit on land is not returned.

It has been a long time since I purchased or sold anything in the USA. However, it might be a good way to find out if the people really think they can sell their property, have the deposit be a months rent, that is then of course applied to the payment of the house.

Just an idea, probably a bad one.

 

[haha]

Allowing this sort of contingency is similar or equivalent (depending on terms to selling an option. Therefore you should get money in return. The rule is never give anything free in a negotiation.


Ha

 

[Gotadimple]

Who would sign up for that? No one I suspect...

The hefty deposit is called an earnest money agreement and is part of the purchase agreement. The seller keeps the money if the buyer fails to fulfill the purchase agreement.

Rita

 

[pb4uski]

Fair enough. I was commenting with the OP's potential buyer in mind. Somehow I doubt that buyer would agree to a non-refundable deposit.

If the deposit was non-refundable then it would in essence be a payment for the option to buy. I doubt many buyers would be willing to pay much for that.

While I originally advocated accepting the contingency, if it does indeed reduce agents willingness to continue to show your home then I would agree with others that perhaps you should reject the contingency.

Johnnie, do you have any insight on how the market is where their current home is? If it is a hot market and there is an expectation that their home will sell quick then it might be a different decision.

 

[Katsmeow]

Does the potential buyer have a contract on their home? I remember on one house we bought in the past we did have a contingency on the contract of selling our house. The seller accepted it because we were already under contract to sell our house. We closed on the sale of our house on one day and closed on the purchase of the new house the next day.

I would not accept a contingency of selling another house unless they were already under contract. If they were I might do it if my market wasn't so good that I felt I could easily and quickly get another buyer.

 

[JOHNNIE36]

Thanks for all the posts. Just to update on a few comments. We live in a retirement community with many types of homes, condos, attached villas, etc. Prices range from $40K to $500K. Right now I think the market has softened a little and homes aren't moving so fast. Also, the prices have gone up and buyers are thinking things over. Ours has been on the market since March 1st.
We have dropped the price $10K since the initial listing.

I guess there are many thoughts on the best way to show a home. Wife is a "heavy" decorator. Realtor told us to get rid of many things so home would appear larger. We did that. Still too crowded and got rid of some furnishings and moved things around. Moving a week from tomorrow so it will be vacant which should make our realtor happy. 2050 sq ft of open space. She should not have any more suggestions in that regard and we are not going to stage the place. What you see is what you get.

Maybe another price drop is in the making. My wife is in charge of the sale and has close ties to realtor. Told them in the beginning the price was too high, but what do I know?

 

[pb4uski]

FWIW, while I know it goes against conventional wisdom, I prefer to view a home without any furnishings. I have no trouble visualizing how our stuff would fit into empty space plus I think it make a house look bigger.

 

[REWahoo]

FWIW, while I know it goes against conventional wisdom, I prefer to view a home without any furnishings. I have no trouble visualizing how our stuff would fit into empty space...

+1

A house without furnishings also makes it far easier to spot problems.

 

[jerome len]

I just wouldn't sell a home if the buyer had to sell their home 1st. If the buyer had sold his/her home, had financing in place and put down a non refundable deposit of at least 6% of the purchase price I'd consider it. You're stuck until they sell......so you would need a time limit, you need to know they can get financing......that takes a letter from the financing source....you need a deadline.....probably 45 to 60 days.....you need to keep your home in saleable shape.....leaving pictures on the wall, etc. Frankly I wouldn't do it......the chances of success, in my opinion are way under 50%.