I had a question from one of my listing owners the other day about how contingent sales work. Seems that it might make sense to write a brief post to clear this particular option up for folks. I would imagine there are more of you out there with the same questions.
First, let me say that in a sellers’ market we rarely need to consider such an offer. But in a buyer’s market, with a lot of competition and few offers showing up, sellers might want to consider this approach as a viable one. As with any North Carolina real estate transaction process, the standard forms used have some safeguards built in for both parties. As a seller, here’s some things to understand about a contingent offer:
Once you have accepted a contract that hinges on the buyer selling a home, you may continue to market your property and accept a backup offer. If you do get a backup, you have to notify the contingent buyer and give them a specified time to respond by either waiving their contingency and closing without selling their home, or terminating their contract. If the contingent buyer terminates the contract, they are entitled to their earnest money back.
One thing to remember is if you get a backup offer for more than the contingent offer, you cannot renegotiate the first agreed-upon price. You can only make them decide to “fish or cut bait,” as it were.
As for the contingent buyer, the important thing to remember is that you will agree in the contract to a date by which you will have your home sold. Miss that date, and the seller may terminate your contract. The operative word here is “may.” The seller does not have to take that action. Also important for the buyer is to pay close attention to the specified dates in the contract. There are timelines spelled out in this document that you must meet.
In today’s market both parties may want to consider using this option to find or sell a home. It isn’t the best scenario, but it might be better than no scenario at all. We need to be flexible and creative in a tough market such as we now are seeing. If you have other questions about this topic or another real estate subject, contact me and I will be glad to help you get your answers.