Would you show a Colorado home to a buyer if the MLS status is Active Contingent or Contract with Contingencies, based upon loan conditions?

Asked by In Disbelief!, Denver, CO Wed Nov 9, 2011

My Boulder home, requiring renovation, was tied up for a month while under contract. Buyer eventually terminated based upon loan conditions given that their planned renovations were too costly. One valuable month off market as home was not being shown. Same day it went BOM it had 2 showings with 7 more to follow w/in a week and a new potential buyer who also wants to renovate. I now want my listing agent to show MLS status as contingent, continue to market/show, and accept backup offers. To protect Buyer, I’m willing to write into contract that house will continue to show for back-up offers only until all contingencies have been satisfied by Buyer. Also, “Seller may not accept another contract regardless if price/terms prove more acceptable.” My agent is unsure as to how to disclose on MLS, or whether agents will bother to show to their client. 1) is it possible to list this as Active Contingent and 2) would you bother to show to a client?

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6
Kirsty Daviau, Agent, Boulder, CO
Wed Nov 9, 2011
When your home is under contract, the agent can either mark it as Pending or as Active/Backup. If it is Pending it will often not show up in searches of the MLS depending on how an agent searches. If it is Active/Backup as you are asking, agents know they can show it and/or write a back up offer but most don't. I do not show homes that are under contract as what if that is the buyer's favorite and then it does not fall through? The buyer will then be disappointed. If the buyer tells me they like a home that is under contract, I may contact the agent and ask them how the transaction is moving along and to please let me know if it falls down. At that point we can see it and/or write an offer.
1 vote
Maria Morton, Agent, Kansas City, MO
Wed Nov 9, 2011
The agent must adhere to the MLS rules and regulations. Most MLS's will allow Back Up status. That does not mean that most agents will continue showing it. I would tell my buyers that the home is already in the process of being sold to another buyer so it is not a good use of our time to entertain that house as a possibility.

Under the circumstances you describe, it might be to your benefit to make a list of all the needed renovations and show estimates for each project. Just give it to them right up front - along with the contractors' name and contact info. The buyers need to be able to project the cost of the house + repairs so that they know if the property is worth the total cost.
0 votes
Ron Rovtar, Agent, Boulder, CO
Wed Nov 9, 2011
Hi In Disbelief!

It is possible on some MLS services to list your home as active/backup (meaning you will accept backup offers) or active/first right (meaning your current buyers have a right of first refusal if another offer comes in). Unfortunately for your purposes, rights of first refusal usually cover contingencies like selling another home, not inspection, loan and other contingencies in the Colorado Contract to Buy and Sell Real Estate. These "due diligence" contingencies usually remain in the contract after the first right provision has been removed by the buyer. (And most buyers would not sign a contract in which they would have to remove due-diligence contingencies) As a result, insisting on a right of first refusal from the buyers of your home would generally not work.

But, even if you list your home as active/backup, you probably would see few, if any, showings. It has been my experience that agents hesitate about showing homes that probably will not be available to buyers. And sellers very often do not allow showings while their home is in active/backup because they are tired of having to keep the house in showing condition and/or they may already be packing. This is another reason why agents hesitate about even trying to show active/backup homes. They know most of their request to show these homes will be rebuffed anyway.

Sorry for the bad news.

Kind regards,
Ron Rovtar
Prudential Real Estate of the Rockies
Days: 303.981.1617
Evenings: 303.473.1926
ron@rovtar.com
http://www.rovtar.com
0 votes
Dave Fish, Agent, Boulder, CO
Wed Nov 9, 2011
without knowing all of the details, it appears that you have priced your home to attract a lot of interest which is great. It is always in your best interest as a Seller to have multiple buyers interested in your home and the best case scenario is to have an opportunity to negotiate a backup Buyer / contract which would automatically come in to play if the first contract failed. In our local market, once you put your home under contract, we change the status in the MLS from "Active" to "Active / Backups" - this displays that the home is under contract but that Seller is still interested in backup offers. Once a contract has passed all of the various default contingencies within the contract (inspection, loan conditions, HOA review, appraisal etc.) it is not uncommon to then change the status to "Pending" which simply means that you're just waiting for the closing date at that point. As a Seller, you definitely do not need to write in to a contract that you will NOT accept any other offers, as you can and should if given the opportunity. However, keep in mind that you will not be able to bump the first buyer out of 1st position if the 2nd is better. Back to your key question, will agents still show your home once it shows as under contract taking backup offers - Maybe. From a buyer's perspective, unless a home is just a fantastic value or great opportunity, there really isn't much benefit in being tied up in a "backup" position. Also, with the search tools that we have as Realtors, we can be notified within minutes of a home coming back on the market if a contract fails. Many Realtors will send their Buyers information on homes that are under contract, but generally speaking, most showings will dry up completely once you go under contract. I have had some success with changing MLS comments to "Strongly encouraging backup offers" after putting a listing under contract - this communicates that it may still be worth showing. Best of luck with your sale and just know that it's very likely that your 2nd Buyer will breeze right through and close as expected! Have your Realtor keep those showings coming!
0 votes
Todd Spiller, Agent, Fort Collins, CO
Wed Nov 9, 2011
The "back up" or under contract status in our area will probably slow showings by 95%. With a "first right" status showings will increase somewhat. I will continue to get sign calls (and a few from brokers) and keep track of those that are interested. I show listings under contract if the property is a top choice for the buyer and after checking to see how firm the contract is. For sellers I will adjust remarks to encourage showings when appropriate.
0 votes
Sally Grenier, Agent, Boulder, CO
Wed Nov 9, 2011
I feel your pain, but this is the reality of selling a home. When you are under contract with one buyer, you need to disclose that. There really is no option for "active contingent". Active/Backup technically means it's still active, and available for showings, and accepting backup offers. However, most agents will not show those to a buyer, unless your options are very limited. For example, if my buyers and I have seen everything, and still haven't found what they want, I will look into properties that are "active/backup" . I will ask the listing agent how the contract is going. Sometimes, they say "please go show it...deal may fall due to X, Y or Z".
Web Reference:  http://www.sallygrenier.com
0 votes
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