Home Selling in Texas>Question Details

maellingwood, Home Seller in Houston, TX

I as seller got a better offer. How do I default on current unclosed contract? What are risks?

Asked by maellingwood, Houston, TX Wed Jan 2, 2013

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with a legal contract the best person to ask is an attorney. Despote crossing out remedy on the contract there may be repercussions to end a contract without merit. Contract law has remedy that may not be included in your contract. Have the attorney outline the pros, cons and costs so you can see. If you have it listed, you may be subject to paying liusting agent or buyer broker fees if there are those contracts as well. It may just cost more than the extra amount the 2nd buyer is willing to pay.... The other thing to consider is if the 2nd buyer still has to go through a home inspection and mortgage they may be able to get out of the contract and you have no buyer instead of a quaranteed buyer.
0 votes Thank Flag Link Thu Jan 3, 2013
It sounds as though you are suggesting breaching a legally executed and binding contract. Your best advice on this matter would likely be via an attorney and will most assuredly come at an expense.
0 votes Thank Flag Link Thu Jan 3, 2013
You risk losing both and getting sued. You have a signed contract, what part of contract don't you understand. Unless the first buyer defaults or makes requests under the terms of the contract that you choose not to honor or negotiate and they (the buyer) terminate you've agreed to sell your home and unless you do you run the risk of getting sued by the Buyer. While they may or may not prevail (that's what courts are for) They can absolutely tie up the property for many months or even years. As to your having modified the contract, don't kid yourself, if you think this will enable you to avoid getting sued you're sadly mistaken. As to suggesting to the first buyer to up their price I can think of nothing you could do to shoot yourself in the foot more, Were I your buyer and you came to me with such an arrogant request I'd immediately contact my attorney, and put a lien on your house.

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.
0 votes Thank Flag Link Thu Jan 3, 2013
The risk I often see is both don't close. You make number 1 go away and then number 2 backs out for some reason and you go back to number 1 and they are now on to a different property and you are left with no buyers. Can't tell you how many times this has happened.

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.
0 votes Thank Flag Link Thu Jan 3, 2013
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
For those of you who gave me usefull advi\se (and the usual disclaimer), I thank you. For those of you who said to consult an attorney without providing any realator professional direction, I say you are the reason I think too many real estate agents don't earn their commissions. Cheers to all.
0 votes Thank Flag Link Wed Jan 2, 2013
Hi maellingwood,

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.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Wed Jan 2, 2013
It was I the seller who modified this clause. It made sence to me to do so. So does come back and bite him. Would that imply I as the seller can defaul with little or no risk and go with the second offer; or is the better strategy to ask current buyer to up the ante. Pros and Cons.
0 votes Thank Flag Link Wed Jan 2, 2013
Very interesting! Was it the buyer who insisted on the legal action claus being removed? Kind of funny that this might come back and bite him.
Of course you should consult your attorney.
Jim
0 votes Thank Flag Link Wed Jan 2, 2013
The house is under contract all dates have been met, closing in three weeks. The purchase contract Sellers Default paragraph was modified to remove legal action and sole remedy is to return depost to buyer. Both buyer and seller signed off on this.
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?
0 votes Thank Flag Link Wed Jan 2, 2013
Think long and hard before you attempt to do this. If the contract is fully executed, you may find yourself in breach of contract if you default on it, meaning the seller could sue you and force you to close. That is not likely, but lesser versions of this are not so unlikely.

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.
0 votes Thank Flag Link Wed Jan 2, 2013
Not all agents are created equal. that is why I, and probably everyone else asks questions on this site. So, If an agent is answering this question, what is the answer?
0 votes Thank Flag Link Wed Jan 2, 2013
Maelling,
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
727.4520.4041
http://RealEstateMadeEZ.us
0 votes Thank Flag Link Wed Jan 2, 2013
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