Home Buying in Aurora>Question Details

Sirena, Home Buyer in Aurora, IL

what does the status Contingent mean?

Asked by Sirena, Aurora, IL Thu May 28, 2009

Can a counter offer still be made? How do we go about this?

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Sirena,

With all due respect, Illinois License Law is very clear about the presentation of offers. I've been representing buyers and sellers since the early 80's, and I remember when it used to be the case that only a "higher level offer" (for lack of a better term) could "kick out" another contract. In other words, if the original contract was "contingent upon sale" of a property, only a buyer who had no home "sale" contingency might qualify to make an offer (for example, they could still have a "home to close" contingency, or simply be contingent on financing, etc.). However, MANY years ago that law was changed. Even a home sale contingency contract can now be "kicked out" by another home sale contingency.

According to the Illinois Association of Realtors "legal hotline", regarding making offers on homes already under contract, they advise:

"The Illinois Real Estate License Act of 2000 (the Act) sets forth the agency duties that you owe your client in Section 15-15. Specifically, Section 15-15(a)(2)(B) states that a licensee must promote her client's best interest by "[T]imely presenting all offers to and from the client, unless the client has waived this duty." In addition, the REALTOR® Code of Ethics, at Article 1, Standard of Practice 1-6, says "REALTORS® shall submit all offers and counter-offers objectively and as quickly as possible." Further, Standard of Practice 1-7 goes on to say that the REALTOR® shall continue to submit all offers and counter-offers until closing unless the client has waived this obligation in writing. Thus, the authority and direction is clear". It goes on to say "To summarize, it is your legal and ethical obligation to present all offers and counter-offers until closing on a property that is already subject to a contract. This is true unless your seller has expressly waived this duty."

While the above passage is addressing duties a LISTING agent owes his/her client, the rule offers direction for the buyer's agent then as well. Unfortunately, the link below is not a "public" link, but rather available to licensed Illinois Realtors only.

I suggest, if you still have questions, you contact a real estate attorney. There is NO requirement, for example, if the current contract is contingent on financing, your offer would need to be cash. And if your offer is VA, there certainly is no stipulation that you could only kick out another buyer if they were contingent on the sale of a home. I'll also say, however, there is a big difference between what is "legally possible" and what is "likely to happen" in the real world setting. While we like to think of this process as very "cut and dry", there are all sorts of nuances that impact the decisions people make.

For example, ask yourself this: If you were a seller and you had your choice between the offers of two buyers, the offers of which were identical except one buyer was putting down 20% of the purchase price, and the other buyer was putting down 5%, which would you pick? 99 of 100 would pick the 20% down buyer (again, assuming ALL OTHER THINGS ARE IDENTICAL) because the larger downpayment inicates they are a stronger buyer.

When a seller (with the counsel of their agent and their attorney) considers a new offer while their home is under contract already, as a practical matter, they will weigh the relative strengths of each buyer. They'll look at the buyer's qualifications as a whole, the "relative strength" of each contingency (home sale, home close, financing, home inspection, down payment, closing dates, interest rate ceilings, and all the other terms stipulated to in the contract) and weigh the risks of taking on a new buyer and losing the first buyer, and the potential benefits of that decision. Even a contract subject to the sale of a home can be kicked out by ANOTHER contract subject to the sale of a home. The listing agent would be discussing with the seller the overall "saleability" of each property, as well as the apparent financial qualifications of each buyer. There is MUCH to weigh in this process.
0 votes Thank Flag Link Fri May 29, 2009
Sirena,

If the home is contingent on a sale of their home then of course you can put an offer on it. However, if it is contingent on financing, you can only put an offer on it if you are a cash buyer. With going VA, you can only put an offer on it if there is a contingency on sale of their home. You never did contact my lender, Niki, 630-854-7434 or Jennifer, 815-685-2088. Email me your criteria and I will set you up on that email program I told you about. You won't receive contingent homes, just available ones.

I look forward to hearing from you again, but this time please leave me your email address or phone me, 708-533-0515.

Carmen Keslin
Remax 10 In the Park
708-533-0515
Web Reference: http://www.CarmensHomes.com
0 votes Thank Flag Link Thu May 28, 2009
Sirena ...
Contingent means there is a contract on a home that is "subject to" something. It can be subject to attorney approval, or to the buyer's home getting a contract on it, or the buyer's home closing escrow, or subject to financing, etc. In other words, Contingent has several meanings.

Technically, Illinois law permits that (unless the seller stipulates otherwise) an offer can be made on any property, even those under contract, all the way up to the day of closing. From a practical perspective, however, most buyers opt not to pursue a contract on a home that already has a contract on it UNLESS there is something specifically indicating that additional offers are being encouraged or unless the contingency has a "kickout" (your agent would be able to tell this from the MLS content on the property). For example, the listing could be contingent on the buyer's home closing, and the contract has a 48 hour kickout. That means that someone else could negotiate an offer on the house SUBJECT TO the cancellation of the current contract, and when they come to an agreement, the first buyer is notified and they have 48 hours to decide to either waive their contingency (in which case they're committing to buying that house whether their home closes or not) or they cancel their contract (in which case the second buyer is getting the house).

Hope this helps!
0 votes Thank Flag Link Thu May 28, 2009
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