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It's Not Personal....It's Business And We Need To Protect Our Seller !!!

Reblogger Lenn Harley

Real Estate Agent with Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate 303829;0225082372

April 06, 2011 02:09 AM

DANGER WILL ROBINSON. . DO NOT TAKE A CONTINGENT CONTRACT FOR A HOME FOR SALE UNLESS. . .

The buyer will verify that:

1. The home they own is listed with a REALTOR.
2. The home they have listed for sale with a REALTOR is listed for a reasonable offering price based on recent SOLD properties.
3. The listing for the contingency is fully accessible by key box, hours, etc.
4. The contingent buyer agrees that the home they wish to buy will remain in the ACTIVE status in the MLS.
5. If the listing is to go to CONT/KO, the Kick Out will can be executed with 24-48 hrs. "NOTICE" to the buyers.

If the Contingent Contract is accepted:

The buyer will complete the home inspection with repair request within 5 days.
The buyer will post a non-refundable deposit of $XXXX in case of buyer default if the buyer's property does not close.

If the Contingent Buyer has a Contract of Sale on their contingency, the buyer has an acceptable LOAN PRE-APPROVAL, proof of funds and is non-contingent.

SOUND TOUGH?? You bet. As Barbara says, the seller at the top of the food chain has to be protected if they are expected to accept a contingent contract.

Privacy isn't even an issue in these matters. A buyer can't expect a seller to take their property off-market unless they are willing to show that they are serious.

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

After reading a post (written to members only) regarding a listing agent requesting some details from a buyers' agent about her buyers' transaction, I thought I'd share my thoughts on this topic. We are listing agents and have received offers from agents who are anxious to close their buyers on a home. However, there are facts that we need to confirm in order to protect the seller and prevent a financial disaster for the seller.

Chains of transactions are common today. When there is a series of transactions relying on the previous buyer to perform, the water can get very mucky very quickly. How irresponsible of a listing agent to not question the status and to not request to see some documentation of those deals. One failed step along the way will cause many fallen transactions. The one at the end, our seller, will take it on the chin.

Our listing will have to show as pending, and no buyers' agent wants to be a backup on an existing pending home. Marketing time will have been lost, and if the seller goes forth and commits to a purchase, there could be a financial loss.

It's necessary to request some written documentation regarding the chain of transactions. We do, and we have not had any problem with receiving the requested information. It's not a personal attack on the buyers' agent. None of this is personal, it's business. It's good business for a listing agent to protect the interests of the seller. Don't take it personally, we're not questioning your ability, buyers' agent, we're confirming the strength of the chain that we're being asked to rely upon for the success of our transaction. It's not personal!!!
                                                                      Copyright 2011- All Rights Reserved

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Barbara Todaro

RE/MAX Executive Realty - Happily Retired - Franklin, MA

Previously Affiliated with The Todaro Team

Lenn....thank you for the reblog....it's always appreciated.....

Praful.....I never use a 24 hour kickout clause unless it's on a condo in a new condo community and I have many more to sell....the builder will allow it and many times we close with that buyer....however, we have also kicked it to curb when another buyer surfaces with a clean deal....we always look for that clean deal with a resale property....buyers' agent, sell your buyers' home first and then we'll talk!!

Lenn....sorry, I had to respond to Praful since he used my name in his comment....hope you didn't mind!!!

Apr 06, 2011 03:38 AM

Richard Weisser

Richard Weisser Realty - Newnan, GA

Richard Weisser Retired Real Estate Professional

Lenn...

I think that you have illuminated the most common pitfall ... the delayed inspection. Why would anyone postpone a possible deal killer for months!

Another stellar post!

Apr 06, 2011 03:39 AM

Mike Jaquish

Realty Arts - Cary, NC

919-880-2769 Cary, NC, Real Estate

Lenn,

We had a discussion on contingent sales yesterday. I wish I had read this before going in. We hit on several of your points, though.

And then I asked how an agent may handle this in Dual Agency. My BIC loves me, but should learn to ignore me when I have my million dollar grin on.......

Apr 06, 2011 04:00 AM

Laura Giannotta

Keller Williams Realty - Atlantic Shore - Little Egg Harbor, NJ

Your Realtor Down the Shore!

Lenn, I can't pass up a "Danger Will Robinson" warning from you. In NJ, the general (oops danger warning) practice is to get the buyer to provide a copy of their listing agreement along with the sale of home contingency addendum.

Apr 06, 2011 04:10 AM

Margaret Rome Baltimore 410-530-2400

HomeRome Realty 410-530-2400 - Pikesville, MD

Sell Your Home With Margaret Rome

Lenn, Now that would be a contingent contract to take very seriously!

Margaret

Apr 06, 2011 04:21 AM

Peter Pfann @ eXp Realty Pfanntastic Properties in Victoria, Since 1986.

eXp Realty, Victoria BC www.pfanntastic.com - Victoria, BC

Talk To or Text Peter 250-213-9490

HI Lenn,

although I agree in principal, there is a lot more to it than a number of requirements.... I think I better do this in a post of my own...thanks for the thought provoking post.

Apr 06, 2011 05:25 AM

Kathleen Daniels, Probate & Trust Specialist

KD Realty - 408.972.1822 - San Jose, CA

Probate Real Estate Services

Lenn, Danger … you bet ya! I like the concept of a non-refundable deposit. Getting proof of all aspects of the contingent sale property is the absolute right thing to do to protect sellers. The buyer verification punch list is spot on!

Apr 06, 2011 06:27 AM

Paul S. Henderson, REALTOR®, CRS

Fathom Realty Washington LLC - Tacoma, WA

South Puget Sound Washington Agent/Broker!

Lenn, you're absolutely right and this is Real Estate 101. Basically shorten up all time restrictions and do your due diligence. I have witnessed some atrocities of the contingent offers. I would never tie up my Sellers property to one of these atrocities…

Apr 06, 2011 06:41 AM

Jimmie Graham

Keller Williams Realty - Ypsilanti, MI

These are great pointers for both Buyer's Agent and Listing Agents...it adds an exta inch to help the deal close smoothly. I like the idea of the buyer having to have their home currently on the market listed with a Realtor. I really don't get it if a listing takes the property of the market not knowing the buyer is a strong buyer after looking at the pre approval, inspections, appraisals and title work. I love the post...something to add to the checklist

Apr 06, 2011 08:29 AM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Praful. 24 hours is the most I'd want to give. I have had some contingent buyers, when getting NOTICE, immediately remove their contingency, post more earnest money when they decide to move to family or rent short term until settlement. It all depends. The bottom line is the seller should NOT be put at risk when a contingent buyer isn't willing to "move twice". That's what we hear. All I can say is, you don't have to. Give the seller a $25K non-refundable reserve and we'll take your contingent contract.

Marian. If a house isn't selling, a contingent contract isn't usually a good solution because it might not appraisa anyway. Contingent contracts just confuse sellers. If the priperty is priced right, a non-contingent buyer will be along.

Barbara. As you can see, I'm not a fan of contingent contracts. Even new home builders only give very short term congingent contracts and then won't start the house until the home is sold and financing approved.

Richard. Indeed. Anything that gives the buyer the right to void the contract needs to be done quickly.

Mike. HA! Shucks, just get up there and talk. It will come to you. Of course, you know what I think about DA.

Laura. At a minimum a copy of the listing agreement. But, that's just a beginning. I want to know the details about the contingent buyer's buyer. If they fall, all the dominos fall.

Margaret. Indeed. I take them seriously, but seriously vet the contingency's buyer too.

Peter and Linda. Go for it. I'll look for it. I batted this out before going to a luncheon. It was too long for a comment, but no time for a post.

Kathleen. Thanks. I think there was some hint in a previous post or comment about "privacy". HA! A contingent buyer can't expect privacy. They have to show proof of ability to close.

Paul. Indeed. Good seller representation demands that the seller be protected BEFORE taking their property off ACTIVE market.

Jimmie. Thanks. Over the years, I've done many contingent contracts and there are certain protections that have to be provided for buyers and sellers.

Apr 06, 2011 09:34 AM

Debbie Gartner

The Flooring Girl - White Plains, NY

The Flooring Girl & Blog Stylist -Dynamo Marketers

Oh, I see now. I read the original of the 3 and didn't get it - now I see it's the equiv of a buyer being pre-appoved or whatever the term is.

Apr 06, 2011 09:38 AM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Debbie. Indeed. Pre-approvals and full protection for the seller.

Apr 06, 2011 09:44 AM

Karen Fiddler, Broker/Owner

Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA

Orange County & Lake Arrowhead, CA (949)510-2395

This used to be so normal...now it's just not. A lot depends on tne needs of the sellers. If they are able/willing to wait, then can do that...if not, then they will only have first-right-of-refusal...which I think is your "kick out" clause. I do require the buyers to continue with the home inspections and pay for HOA docs and remove those contingencies in the normal time frame. I don't want to have us wait for them only to find they have unreasonable requests or expecations.

Apr 06, 2011 12:51 PM

Lou Ludwig

Ludwig & Associates - Boca Raton, FL

Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Lenn

Thanks for sharing a very informative re-post and your insight.

Good luck and success.

Lou Ludwig

Apr 06, 2011 02:21 PM

Mitchell J Hall

Manhattan, NY

Lic Associate RE Broker - Manhattan & Brooklyn

No seller in Manhattan would ever allow a contract contingent on another home sale. However, the loan commitment is contingent on the mortgage on the first house being paid off.

I recently had a buyer that sold their Long Island home and bought a Manhattan coop. The offer was accepted based on the fact they had a contract on their house. As the transaction proceeded the buyer told me they wanted to close on the new apartment first so they wouldn't have to move twice or stay in a hotel. I told them that wasn't possible.

They insisted they could afford it, the contract wasn't contingent and I should know because I saw all their finances when I presented their board package. Always the diplomat, without insulting them I explained they had enough money for the down payment, it's not about selling first, it's about having two mortgages. The lender will not fund the loan until the other is paid off. It is right on page 1 of the loan commitment.

Apr 06, 2011 03:09 PM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Karen. These KO's are a bit tricky, but they can work. In our market, the seller produces the HOA/Condo docs but with a contingent contract it needs to be done ASAP so, if the buyer is going to void on the docs, it's done quickly.

Lou. Thanks for stopping by.

Mitchell. Indeed. If a buyer can qualify for two mortgages, they can do pretty much anything they wish. If not, got to get that first one SOLD and settled first. Even the slightest contingency can cause the cards to fall. Agents have to protect those sellers.

Apr 06, 2011 10:48 PM

Karen Fiddler, Broker/Owner

Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA

Orange County & Lake Arrowhead, CA (949)510-2395

It's normal for our sellers to produce the HOA also, but with a contingent offer, I have the buyers agree to do that. If they are serious, this is a small price to pay to lock up a house.

Apr 07, 2011 06:33 AM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Karen. Makes sense. Just getting a contingent contract accepted is a sweetener for the seller.

Apr 07, 2011 10:43 PM

Jim Little

Ken Meade Realty - Sun City, AZ

Your Sun City Arizona Realtor

Lenn, I agree with all of the points you mentioned, and raise you two.

Contingent Buyer's Home MUST Be in Escrow!

Contingent Buyer must allow me to talk to the lender in the sale of their home.

We have a population of sellers who won't buy green banannas, why would I recommend a contingency without stringent protections?

Apr 08, 2011 02:44 PM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Jim. Good points. However, most "contingent contracts" around here have homes that are actively on the market and not yet "under contract" or as you would say "in escrow". This "not yet in contract" is why they are so risky.

We have many buyers who "don't want to move twice" and believe that they can tie a home that they like up with a contract while they liesurely try to sell their existing home.

As for letting the seller/owner's agent speak with the contingent buyer's lender, THAT IS FUNDAMENTAL.

Apr 08, 2011 11:01 PM

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