Here's something I learned years ago and you may want to think about, "Do unto others as you would have them do unto you.
Why did #2 offer $30000 more?
I know it is tempting, but price is not the only consideration in offers in my opinion.....there really are 8 more pages to the contract that matter. Closing dates might matter, financing might matter, who they are getting financing from, inspections, and on and on. Do they both offer the same earnest money, option timeframes, etc?
You are pretty far along with buyer #1...I think your risk that they close is minimized the closer you get to closing....you know about the potential deal killers at this point, except for financing perhaps. Making them go away to me opens a whole new set of negotiations with #2.
How long has the property been on the market....if just 2-3-4 weeks and you got two great offers, it will sell if #2 goes away in my opinion. If these are the first offers in 6months, I'd stick with #1....but of course we don't have all the information here to walk you through all the steps.
I guess too if #1 gets upset, they could tie you up in litigation where you can't sell to #2, even if you have deleted some of the normal seller default language. They might not win, but you never know until you get in front of a judge. I can hear a judge saying the contract is unfair and one sided and therefore he will allow the sale. Who knows if a buyer would take it this far....but there is a risk.
You should consult a Real Estate Attorney for your best answer to this. That said, if you can and do cancel the first contract and go with the new/higher offer, are you 100% sure the new/higher offer will be able to close? Are they paying all cash and if so, do you have proof of funds? If they are financing, you need to keep in mind there is ALWAYS a possibility they will not be able to get their loan (even if they are pre-approved) - due to funding, appraisal, etc.
Current contract price is $465000 less closing costs. And new offer is $493000 less closing costs.
I want to default on current contract. Is this possible? Or should I 'present' the higher offer to the current buyer and ask them to up their price or suggest I will not close?
If the contract is not fully executed, then it's a different story. I tell buyers that their deposit is what they risk in the deal. The seller risks losing the chance of selling it to another party for $1 million (or whatever).
If you still wish to abrogate the deal, please consult an attorney first. Another way to handle this might be to take a "back-up offer" from the second party, so that if you current party cannot get financing, wanted you to make further concessions, etc, then he automatically vaults to first place.
This is a great question to present to your real estate agent.
If the buyer has a real estate agent...you will not 'default' on the current contract.
Your agent will able to advise regarding your options.
Best of success to you
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL