Contingencies in
contracts will always exist.
It is a rare thing to find a
written contract which
satisfies both parties right
up front without a
contingency.
In a sellers market,
even if the buyer writes it
with no contingencies, the
seller will tack on a few of
his own -- must find home of
choice, comes to mind. Even
so, when sellers add
contingencies, it's usually
only a couple that are
easily remedied and which
don't cost the buyer much
money. When buyers add
contingencies, on the other
hand, it means the seller
may face delayed expenses
(such has home inspection
defects) or have the chance
that the house may not sell
at all.
For example, a
Washington, D.C. area seller
writes that he has
"drastically lowered" his
price, has a great agent and
is "very realistic about the
market," but that he's
turned down two contingent
contracts with unrealistic
buyers. Having lowered the
price to 30 percent below
appraised value, the two
contracts have both been
contingent on the buyer
selling his or her home
first before completing the
sale.
In further discussion,
both buyers, according to
this seller, are very
unrealistic about the value
of their own homes, and want
to put them on the market
way overpriced. "They think
my house is a great deal
because I have lowered my
price," Tired Seller writes.
"Then they write a contract
based on the equity they
'assume' they have in their
home. They want to list it
way overpriced ... . My plan
is to just keep lowering the
price until it sells. Any
advice?"
First of all, if
you've already drawn two
contracts, then you may have
hit the low-enough point.
Now, work on the marketing
and seller subsidies up
front. In addition, before
rejecting an offer outright,
I would write a counter that
the buyer can only list the
property for a certain
amount. Don't say, "market
value price," go ahead and
have your agent draw up a
comparative market analysis
on the buyer's house and
base the price on that CMA.
In addition, ask the
buyer to follow the same
modus operandi you have --
be willing to drop the price
every other week until it
draws a contract. Write all
this verbiage in the "Other
Terms" section of the
contract. Remember, in real
estate everything is
negotiable. |
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When a contract comes
through, in a buyers market
a seller needs to remember
to keep his or her cool. You
don't need to roll over and
play dead, accepting any
terms the buyer offers.
Remember, you have a
contract in your hand. While
the buyers may have dozens
of other homes to choose
from, they have chosen yours
because it obviously fits
their housing needs. They
also obviously like your
price, so now concentrate on
the terms. In today's
market, if your house is
priced right, then you only
have to focus on terms to
get a winning contract on
the board.
The challenge of
accepting a contingent
contract in many MLS's
around the country, is that
the status changes from
Active to Under
Contract/Contingencies. The
problem with that is with so
many homes on the market, 99
percent of buyer agents
search only Active listings
for their buyers -- they
rarely seek out UC/Contingencies
status. Why bother? They are
obviously in negotiation
with a buyer already.
So switching the
status may mean your home
lingers toward closing while
waiting for the buyers' home
to sell. On the other hand,
the buyer becomes much more
motivated to sell and may be
willing to drop the price
right away to elicit a quick
sale.
The No. 1 contingency
in contracts today is the
home inspection. Instead of
fearing this contingency,
the astute seller will
conduct his or her own home
inspection and fix the
problems before the buyer
finds something later. Be
tough on your own house. If
it has an old air
conditioner -- have it
worked on and serviced. Make
sure all the plugs work
properly.
If you are a
do-it-yourselfer, make sure
you have the permits or at
least professional
inspections necessary to
show you did the work right.
I've seen sellers redo the
plumbing and/or electrical
work of the previous owner
who was a DIY because they
just didn't know it was done
wrong.
In other words, the
seller who anticipates the
challenges from a buyer will
be ahead of the game. Don't
wait till you "find out"
that you have termites --
look it up and uncover the
defect before it's a
surprise. Be willing to
accept contingencies, but
also be willing to negotiate
to make it work for you as
well. |
