Contingent offer, what could go wrong?

There are all sorts of contingencies that can be put on an offer to buy real estate. The two most common are inspection contingencies and contingent on financing.

Buyers can also make an offer contingent on the sale of their home. It happens all the time but those contingencies get complicated.  Usually offers that are contingent on the sale of real estate can be bumped by non-contingent offers from other buyers.

Here are a few things that can and do go wrong:

  1. A non-contingent offer comes along and the seller accepts it and the contingent buyer’s offer gets canceled because they do not get an offer on their home fast enough.
  2. The contingent offer isn’t accepted because there are several other offers that are non-contingent.
  3. The seller asks that the contingency is removed within 48 hours because they can and they got cold feet and you all agreed to the 48 hours.
  4. The buyer gets an offer on their property but it is a contingent offer, which means it can not be used to remove the sale contingency.
  5. The buyer gets an offer but the financing on that offer falls through and offerer is unable to perform.

Sometimes there is a chain of 3 or more home sales that depend upon that first home sale in the chain closing.

When selling your home is contingent on the sale of someone else’s home it will cause a lot of extra stress if your purchase is also contingent on a sale.

I have been through chains of sales with multiple contingencies and they often work out. I have learned to go into these situations believing that everything will work out and I encourage my clients to do the same.

In a strong seller’s market is especially important for home sellers to have a plan and know where they are going to live after their home is sold.

All offers have to be presented

One of the issues we are running into in this seller’s market is that offers from buyers are not always being presented to the sellers . . or sometimes we are not sure they were presented or sometimes they are not presented right away.

If a buyer makes an offer, even after the seller has accepted an offer that offer must be presented to the seller unless the seller had waived this obligation in writing.

When I represent buyers I sometimes ask that the seller initial the offer as an indication that he or she has seen it. The initials also give me proof to offer the buyers.

As a rule, offers should be presented quickly but there is no hard and fast rule about how quickly. We use terms like “timely manner”. In some situations that “timely manner” can be several days or even a week.

“Timely manner” can also mean right now.  Some of our clients give the seller a 24 or 48-hour deadline. Giving a deadline can backfire too.

REALTORS are bound by a code of ethics which is an extra set of rules that dictate how we handle offers.

From the code of ethics:

  • Standard of Practice 1-7

When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing. Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide a written affirmation to the cooperating broker stating that the offer has been submitted to the seller/landlord, or a written notification that the seller/ landlord has waived the obligation to have the offer presented. REALTORS® shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord. REALTORS® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease. (Amended 1/19)”

The code of ethics only applies to REALTORS® and there is a complaint process.   Anyone can file a complaint.

Confusing and deliberately misleading

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The world of marketing homes for sale on web sites is misleading, sometimes deliberately so. I saw an advertisement in a neighborhood newspaper about how many visits the web site of a local real estate company gets and how home sellers should have their home listed on it.

The ad more or less says that if you want your home listed for sale on our website then you need to list it with one of our agents. What the add doesn’t say is that if you list your home with any agent from any local real estate company it will end up on our site and appear to be one of our listings.

When someone lists a home with a local real estate company, and we can use my company as an example, the same information appears about the home appears on like a zillion web sites. Usually, the listing information is fed directly to participating sites directly from the MLS. The same feed also sends it to Zillow and Realtor(dot) com and many other sites.

As a home seller if it is important to you to have your home listed on the web sites of the largest local companies or on the web sites with the most traffic listing your home with any REALTOR® from any real estate company should work.

The system may be confusing but it also gets all of the agents in the area competing to find a buyer for all of the homes that are listed. Your house is also used as bait by agents who pay to get “leads” from sites like Zillow.

Real estate agents pay to have their contact information next to the listings. In fact, the reason the sites are free to consumers is because of advertising revenue from real estate agents. Yet consumers often see the site as an alternative to real estate agents.

People who are selling their home without listing it with an agent can and should list it on Zillow. There is no one place where all of the homes that are for sale by owner are listed so it is important to go where the traffic is.

The spring market is heating up. The number of homes for sale was up slightly from record-breaking lows but in the last few weeks home buyers have been shopping again and making offers. We are still in a strong seller’s market.

Also see: Broker reciprocity

Also, see:  Agency

Sell it as it is

Houses can be sold “as is”. Often estates are sold this way but any house can be sold as is. That means not having to worry about making repairs even if home buyers ask for them. There are always people who will buy houses that need some work or maybe just some TLC.

If making repairs and getting a house ready for sale seems overwhelming. Put it on the market as is. The house should be marketed accordingly so that buyers understand that the seller will not be making repairs.

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Cold weather tips for home sellers and buyers

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Winter is upon us with no end in sight. As soon as it stops snowing or we get a little warm-up the home buyers will be out looking again.

Here are some winter tips for home sellers:

1.  Leave some lights on so we can open the lockbox and unlock the door.

2.  Remove the snow and ice from the walkway.  Clearing the sidewalk makes it less likely that someone seeing your home will fall on their a$$ and sue yours off.

3.  Place a walk-off mat near the front door that is big enough for four pair of shoes.  This small act of kindness will keep my feet dry because I won’t end up standing in a puddle made by my clients and it will keep your floor dry and your home cleaner.

4.  If your home is vacant please have it winterized, that means that you have the water turned off.

5.  Light in a home is a good thing, especially in the winter.  You want to make it look warm and inviting.   If you normally live like cave people with every blind drawn and every shade pulled consider making some changes so that your home will sell quicker and so you will get more money for it.

6.  If your home is occupied and you have a bunch of burglar alarms and maybe some barbed wire and a guard dog consider easing up on the red alert status.  (this has nothing to do with the weather . . I was on a roll)

Here are some tips for home buyers:

1.  Wear shoes or boots that are easy to slip on and off.

2.  Go to the restroom before you begin house hunting.  Homes that are winterized have no running water.

3.  If you are interested in a home that you saw in the dark please schedule an appointment to see it when it is light out before you make an offer.

4.  Most agents carry a flashlight but it is a great idea to bring your own.

Wood is better than carpeting

Back in the 1950’s and 60’s carpeting over hardwood floors was common. Sometimes the carpeting was put in right after the home was built and the floors underneath it are in mint condition.

Home buyers prefer hardwood floors. I have known this for many years. National Association of REALTORS® found that 54% of home buyers were willing to pay more for a home with hardwood flooring. (study was done in 2016)

I am not suggesting that people who want to sell their homes run out and replace the carpeting with hardwood floors. Sometimes the carpeting needs to be replaced and there is hardwood flooring under it. Even hardwood floors that need a little work are better than old carpeting and usually better than new carpeting.

From experience, I know that there are certain types of homes that people expect to see hardwood flooring in. People expect older homes to have hardwood floors. That doesn’t mean that hardwood is preferred in bedrooms, kitchens, and baths or that every room in the house has to have hardwood floors.

It should also be noted that a buyer’s willingness to pay more for a home with hardwood doesn’t mean that they will be willing to pay enough to cover the cost of the hardwood floors. There is quite a price range for the flooring and it doesn’t always have to be oak.

Some of the most popular flooring options include mid-priced varieties such as teak, American cherry, and oak, which costs $5 to $10 per square foot for materials and another $4 to $8 per square foot for installation. Carpeting costs a lot less, which is one of the reasons why it became so popular.

There are a lot of choices even composite wood floors. Dark wood floors have made a big comeback.

Nothing is really all that black and white when it comes to making improvements that will have a positive impact on resale value. There are shades of gray but it is good to know home buyers will pay more for homes with hardwood floors.

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