The C word

| Wednesday, June 8th, 2011 | 4 Comments »

In real estate there is one word that can sometimes feel like a swear word. It can upset a seller, it can frustrate an agent and sometimes buyers only use this word when they are desperate. So yes, a lot like a swear word!

The word I’m talking about is contingent. For the purposes of this post, the type of contingency I am talking about is the kind where a buyer makes an offer on another home contingent upon their current home selling. To a seller, this is not necessarily a good offer and here’s why. The most obvious reason is that the seller has no idea how long that buyer’s home will take to sell. Will it be a week, a month, a year? In the mean time, the seller’s home has now been given a contingent status meaning it’s no longer considered an active property. In short, it is basically invisible to all other potential buyers. An agent searching for a home might also miss it unless they check the box that says contingent. When I geek out every day and check the market stats I rarely ever see more than 3 contingent homes so many times agents won’t even bother searching for contingent properties. For a seller to accept a contingent offer they are most likely a.) not in a hurry to sell b.) been on the market a long time and are desperate for any offer or c.) all the other terms of the offer are good, most likely the price. However most of the time, sellers will simply reject a contingent offer.

The downside for an agent who has a client making a contingent offer is that there’s a lot of pressure to sell the buyer’s current home. The agent for the seller may ask to see their marketing material, ask for weekly reports of how many people are looking at the home and ask for built in price drops. I know because it’s happened to me. It’s a tough spot for an agent to be in and they take a lot of the blame when the buyer’s house isn’t selling.

And let’s not forget the buyer; chances are they don’t want to be in this position. In a perfect world they would love to be able to buy a new home and then worry about selling their old home later or time it just right where they sell their home and buy a new one simultaneously. The other alternative would be to sell their home and rent while searching for a new home and I’m sure you are all smart enough to come up with a reason or two while that’s not an easy option. If contingent is the only possibility and they are lucky enough to get a seller to accept a contingent offer, there is always “the bump.” That means if a new buyer comes along with a better offer, they either have to remove the contingency or terminate the offer.

Well now that I’ve beaten up the contingent offer until there’s nothing left, I’m wondering if there are any positive stories out there. If you’ve experienced a successful contingent offer and have lived to tell about it, I’d love to hear! If a contingency is your only option and you need an agent who knows a thing or two about contingencies, I’m your gal!

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  1. Janice says:

    Ha ha, from the title I thought this was one of our baseball emails! Very informative.

  2. Hannah says:

    It seems this contingency used to be far more common, didn’t it? I’d likely run from it these days except that I could easily see myself in position (b) above in the future.

  3. Barb Mora says:

    Cara, I just love your site!! Maybe the next word on your blog should be the “F” word (Foreclosure) haha. Unfortunately, there’s many of those in today’s market. Glad people have someone with all your knowledge to help them through all the trials and tribulations of buying and selling.

  4. Sheila says:

    Ah, the C word…nothing good about that word.

    Ditto what Barb said regarding an F word post!

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