Deb's Lake Conroe Real Estate & Stuff! : Contingencies and the DominoTheory.

Contingencies and the DominoTheory.

Contingencies and the DominoTheory.

You probably get initially excited thinking, "oh, finally I've got this one sold," but then you wake up to the light of day. We have all gotten offers from a customer or client that makes you feel like you had a mountain to climb. A contingency is one of the mountains...with lots of foot hills.

It may not be that big a deal to your Sellers, like maybe they're moving slowly (literally) and have no problem with taking their time. Remember, that's only in the beginning. Slow may be acceptable in the very beginning.

But, as the motion of the move progresses...so does the liability.

And, let's examine the potential liabilities. A Buyer's Rep brings a buyer for one of your listings and they offer a strong price. The only difference is that they have to sell the house they're in before they can totally commit to the sale. At least for that moment they have a good intent.

What happens when the buyers of the house they plan to sell lose their financing or their job or they get a divorce or there is a death in the family or the children convince them they just don't want to move?

Your Sellers aren't in a huge hurry so they say sure...with financing approval. Well, we all know that's easy enough to get.

YOU ARE APPROVED with these stipulations...

1. You must forfeit your first born.

2. You must allow yourself to be cloned.

3. You must go on a 1200 calorie daily diet...okay that's it. We're out of here. We may have thought we wanted to buy the place but that was a long time ago. We've changed our minds now...or whatever your customer's reason may be...they just walk away.

Contingencies hurt. They hurt the Seller, the agents, the lenders involved, the appraisers, the inspectors, the surveyor's, the life plan of the living.

          Period.

My recommendation is to limit the amount of time you allow a contingency. Really limit it. Require check in points and a guarantee from a lender with verified funds. If you don't you are asking for trouble.

Continue to show and take back-up offers. Remember you can take another offer and require the original contingency buyer to put up or shut up. Do it. Do it for the benefit of your seller.

No one has all the time in the world. Guard these folks as you would yourself.

 Later in the rain~Deb

 

 

and Proud of it!

 

                                                                                                   Please subscribe~       
**********************************************************************************

 

 

Texas Home Search on FaceBook

Check out my website at: www.debs-realestate.com.

 Some photos attributed                                     

 

 

 

 

Comment balloon 19 commentsDeb Brooks • May 27 2008 09:35PM

Comments

Limit contingencies and your banker will love you!

Posted by Susan Hilton, Texas Aggie Real Estate, College Station Bryan Texas Real Estate (CENTURY 21 Beal, Inc.) over 12 years ago

Debra, I could not agree more!!  I recommend to my clients that they not even seriously start looking until they have an offer on their home.  I will have to tell you my contingency woe story some day when you have lots of time.

Posted by Marchel Peterson, Spring TX Real Estate E-Pro (Results Realty) over 12 years ago

Susan, I so agree with you about limiting them...like preferably to none.

Marchel, don't we all have a horror story or two? I will look forward to sharing your woes.

Night Lissa, get some sleep.

Later in the rain~Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) over 12 years ago

Deb - This is so true, it is very important to set a time frame.   When one of these deal drags on it really gets frustrating.

Posted by Jennifer Fivelsdal, Mid Hudson Valley real estate connection ( JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571) over 12 years ago

DEB - You mentioned the key to using a contingency at the end of your post.  Sellers must continue to show as if the home never had an offer on it.  Too often, even when an offer is not a contingency offer, sellers feel that they are done once an offer has been accepted.  Nothing could be further from the truth.  Many deals die way before they ever get to a closing table.  It's even more likely in this area because we have the added step of attorneys preparing contracts.

Posted by Adam Waldman, Realtor - Long Island (Westcott Group Real Estate Company) over 12 years ago

Adam, I knew you did have the attorneys as an added step from your writings. That seems to me like it would be a nightmare. This must really hold up the time frame from start to closing?? That's really scary! Thank you for stopping by! I appreciate it so much. Later in the rain~Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) over 12 years ago

I think you left out the 4th contingency: The pick-4 contingency wereby the buyer of this home shall purhcase a lotto ticket and use the proceeds for a downpayment. If they fail to hold a winning ticket, this offer is null and void when the buyer gets around to telling the seller a within 35 day time period. Good Luck!

Posted by Mary Strang over 12 years ago

Hey Mary, that's the best one I've heard yet! I may have to use that one myself...I should run right out and buy that ticket. I've had my eyes on a nice little waterfront! Thanks for the idea!

Later in the rain~Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) over 12 years ago

Good Morning, Deb,

Well said.  What you have here is the cold, hard truth...needed to be heard!

Posted by Yvette Smith, Realtor In Williamsburg VA, Homes for Sale (LONG & FOSTER) over 12 years ago

Good info Deb,  I hate to do contingencies.  I rarely have one that turns out well.  Have a great week :)

Posted by Ricki Eichler McCallum, Broker,GRI,ABR, e-Pro, TAHS (CastNet Realty) over 12 years ago

Hello there Yvette! Nice new signature! Very nice to see you ladie! What's going on in your world? I've been crazy here! Busy too,,,ha.

Ricki, I've had them turn out but they few and far between. I had a couple of my "last years" clients and friends stop by to see me today. What a wonderful surprise it was and now that I think of it I sold their house while we had a contigency on another for them...good thing I sold it! This is the part of the business I love. The clients...the people.

Later in the rain~Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) over 12 years ago

I love these Texas Sweet Hearts, No mixing words they just get to the point. Truth rings like a mighty bell tower. You go girls keep writing and amazing us.

Steve

Posted by Steven Nickens, R(S)GRI ABR, Maui Real Estate Hawaii (Wailea Realty) over 12 years ago

Hello Steven! And, how are you this evening? Did you enjoy more sun and surf today? What kind of commercial properties do you specialize in? Just curious...

Good to hear from you! Later in the rain~Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) over 12 years ago

Hello Steven! And, how are you this evening? Did you enjoy more sun and surf today? What kind of commercial properties do you specialize in? Just curious...

Good to hear from you! Later in the rain~Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) over 12 years ago

Deb, Contingencies seem to be more common these days, they can be so frustrating but have to admit I do the same occasionally.

Posted by * Rate A Home (Rate A Home) over 12 years ago

Debra, great post! Couldnt agree with your more on limiting contingencies, it really does help. See you around for lunch in the rain sometime soon!

Posted by Marey Hoeppner, Your Success Is Our Goal! over 12 years ago

Deb, in your spare time, don't forget to get your BBQ contest post in...you have till June 10th :).  Love the photo.  L

Posted by Liz Carter, Broker/Owner of Liz Carter & Team Realty, Katy TX (Houston) (Liz Carter & Team Realty-Your Real Estate Resource For Life!) over 12 years ago

We'll take a contingent contract if the following are agreed.

1.  The buyers loan is approved.

2.  The buyers do their home inspection.

3.  The buyers buyer, if one appears, meets the same criteria that our buyer met.

4.  The property remains in the ACTIVE status.

5.  The buyer's listing is market and not overpriced.

6.  There is a 24 hour KO. 

7.  The buyers listing for the contingency is correct with photos, description, access, etc.  No need taking a contingent contract if the contingency doesn't have a prayer of selling.

Strangely enough, we've had a number work out.  We've also have a number poop out because they couldn't sell the contingency, usually a condo. 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 12 years ago

Hi Lenn,

You're a bit tougher than I am. We usually agree to a 72 hour KO. I guess the reason why is that if the first contingency is going to be knocked off the fence I want to make sure the next ones will perform...usually without an option period. If they don't perform within that time then what's the difference in waiting? We do continue to show the house in full force.

Later in the rain~Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) over 12 years ago

Participate