A Buyer Opportunity

The Contingency Sale Part 3

          In the two previous installments concerning the Contingency Sale, we concentrated on how and why sellers should now be considering offers on their homes contingent on the buyer first selling their own home. We saw that the contingency sale is not new, but was a common method of selling a home before the market gyrations of the mid 2000’s to just a few years ago. Basically, our local real estate market has now returned to “normal.” And in a normal market, contingency sales are a viable and necessary tool we use to buy and sell homes.
          Today we look at the buy side of the contingency sale to see how a buyer can best structure their offer to obtain the best possible response from the seller. After all, it’s no given that a seller will want to accept an offer contingent on the sale of the buyer’s home. Why? Because escrow risks increase as more properties (and buyers and sellers) enter the mix. The contingency deal states that if the buyer’s home doesn’t close for whatever reason, the buyer is not obligated to close on this home. Therefore “due diligence” homework is needful to ascertain the facts (hence, risks) that may surface to derail the deal.
          To be able to get the best look from the seller, the buyer should have already found a buyer for their home, they’re in escrow with a pre-approved buyer, and they’re past the due diligence (inspections) phase on their home’s escrow. In other words, they’re just waiting to close without any known roadblocks.
          But what if that’s not the case? What can a buyer do if they’ve found the house of their dreams, but their house has not sold yet? To be honest, this is not a strong position for the buyer. A buyer’s agent (on behalf of their client) must be able to convince the seller/seller’s agent why they’re better off taking this deal as opposed to another. First, we need to find out how long the seller’s home has already been on the market. If it’s been on the market for a long time (over 60 days) a seller will be more apt to consider it. Also, what is the buyer offering? I would recommend a full price (or more) offer, and all other terms and conditions to be seller beneficial. Whereas a low-ball offer will most likely be an insult to the seller and cease negotiations.
          Another tool a buyer (or seller) can use is the “Contingency Release Clause.” The CRC basically allows the seller to continue to market the property and accept other offers subject to a 72 hour “right to release” the buyer’s contingency to close escrow on their home. The downside of this for the buyer is they may have to forego being able to buy this home if there is no other way to close the deal apart from selling their home. The dirty little secret however is that the seller is required to now list the home as “UCB” which stands for Under Contract, Back-Up Offers only. Most agents will not show these home to their buyers.
          There is more that buyers and sellers can do accomplish their buy/sell goals using a CRC. If you or someone you know would like more information about real estate, please give us a call. We’re here to help. 602-689-3100.
Mike Bodeen