What contingency clauses are reasonable in purchase offers: mortgage? selling current home? As a seller, how do you set time limits on contingencies?

Asked by Sue, Saint Petersburg, FL Mon Jan 24, 2011

Help the community by answering this question:

+ web reference
Web reference:

Answers

10
Spirit Messi…, Agent, Tucson, AZ
Sun Feb 13, 2011
I should also point out this is on top of the contingency's that are already spelled out in the 9 page Arizona Purchase Contract, for example termite or loan contingency. What I was referring to is anything "extra" that would be added to the standard Arizona purchase agreement.
1 vote
Spirit Messi…, Agent, Tucson, AZ
Sun Feb 13, 2011
Honestly, you are asking an opinion question. I believe what you are really trying to do is validate some sort of contingency you need to make, is that correct? I will tell you this, in this market here in Tucson, AZ any contingency will lessen your chance of the transaction. For example, as the listing agent when I present an offer, even for full price and it is contingent on the buyers selling their house in X first, the sellers most of the time will not even consider it. Why would they? Then need to sell, not lock up their house, no more showings or interest until this other buyer may or may not sell their house. < contingencies you are asking for, greater the chances of your offer being accepted.
Best of luck.
1 vote
Tammy Deitz, Agent, Lakewood, CO
Mon Jan 24, 2011
As a Listing Specialist, I normally would advise my Seller to not accept a contingency clause but instead offer a first right of refusal. For example, we negotiate all the terms then place a statement that Buyer will be given 72 hours notice to remove their contingency if we receive another offer. That way, the Buyers is locked into a contract with terms that are acceptable, however, if their contingency (i.e. their home selling) goes poorly then we have an option to give notice (first right) if the Seller should receive another acceptable offer.

Honestly, in this market, you don't want to pass up a so-called "bird in the bush" even with a contingency clause, however -- you don't want to lose the Buyer without contingencies. The best middle ground is a "First right of refusal."
Web Reference:  http://www.dgsells.com
1 vote
Anna M Brocco, Agent, Williston Park, NY
Mon Jan 24, 2011
If you don't have an agent, consider consulting with an attorney who specializes in real estate for all related documentation, information, advice.....
1 vote
Caroline York, Agent, St Petersburg, FL
Sat Mar 29, 2014
Reasonable contingencies are financing, inspections and a contingent for buyer to sell home. In our Florida real estate contracts there are suggested limits included in the Purchase Agreement as well as a blank to fill in should you want to customize. As soon as you begin the listing process on your home your Realtor should provide you with a Purchase Agreement for your review. It is not wise to wait until you have an offer to read this. There is generally quite a bit of emotion at that time so it is no time to read the Purchase Agreement for the first time. Your Realtor's main responsibility is to negotiate with the buyer on your behalf. We are familiar with most concerns of sellers and can make recommendations for time frames for any contingency as well as advise when someone requests something that is not in your best interest. For instance, if the buyer wants to close on the property and then lease it back from you, etc.

http://www.StPeteLifestyle.com
0 votes
Thomas Moser, Agent, East Northport, NY
Mon Oct 28, 2013
Satisfactory inspection, ability to obtain mortgage, and attorney's approval of contract and standard offer contingencies.
0 votes
paul124, Home Buyer, 14212
Mon Oct 28, 2013
Hi Sue

I can't understand what you say. I have a reverse mortgage . Its name is reverse mortgage lenders direct. They are very helpful. You can get any question by search

http://www.reversemortgagelendersdirect.com/florida-reverse-…
http://www.reversemortgagelendersdirect.com/questions-answered/
http://www.reversemortgagelendersdirect.com/advantages-and-d…
http://www.reversemortgagelendersdirect.com/reverse-mortgage…
0 votes
Dp2, , Virginia
Sun Feb 13, 2011
If one tries to extract the most value out of one's property, then one sometimes ends up having to accept offers with more contingencies. Some sellers (especially some investors [myself included]) might price their listings more aggressively (meaning slightly lower than the competition), and often won't have to put up with as many (if any) contingencies. Stated another way, they're creating more demand for their product (or property) by offering a better value proposition than their competitors. The buyers will notice this, they'll tend to submit stronger offers, and the sellers will close faster.

However, reducing one's list price isn't the only way for one to add more value to that deal. Offering better terms, or throwing in some premiums are some other ways to add more value. One needs to understand that the primary reason why buyers will put contingencies in an offer is that they don't know whether the target property is worth its list price. Yet, they'll jump impulsively at the chance to snatch up a bargain.
0 votes
Liane Jamason, Agent, Saint Petersburg, FL
Sun Feb 13, 2011
A financing and inspections contingency is normal in our market. Let's say the offer you receive is a strong one and it has a financing contingency of 30 days - this is pretty standard. In reading Tammy's response, if you countered this offer with a First Right of Refusal, you now have given the buyer an "out" - an opportunity to walk away and they DID present you with a pretty nice offer. Countering with First Right of Refusal could give the buyer a sense of a lack of goodwill on the Sellers part. I think I would ONLY do this if I were receiving multiple offers from the get-go, otherwise I'm not sure I'd do a First Right of Refusal if the Buyer has a strong Preapproval letter, a decent down payment and a good offer. Normally we do not see many "selling current home first" contingencies in our market anymore since the current days on market in Tampa Bay is 90-120 days.
0 votes
Caroline York, Agent, St Petersburg, FL
Tue Feb 1, 2011
A mortgage contingency is reasonable and most often necessary for the buyer. A 72 hour clause will make your listing go from Active to Active w/Contract which often makes it invisible to most realtors and will eliminate many prospective buyers from seeing the property. Most agents do not show properties if they are not listed as Active. The contingency where the buyer has a house to sell is one that can work for or against the seller. I had a seller who received a 95% offer with a contingency that the buyer had to sell his condo. The seller did not want his listing to become invisible so he decided to refuse the offer. The buyer sold his condo in two weeks and then had second thoughts about my sellers property. It took another 18 months for my seller's property to sell and it sold for less than half of what the first buyer offered. If he had the buyer under contract the buyer would not have been able to walk away as easily.
0 votes
Search Advice
Search
Ask our community a question

Email me when…

Learn more