[photopress:startinggate.jpg,thumb,alignright]The “Contingent” seller knows exactly where he is going if and when his house sells. He is stuck at the starting gate until he gets an acceptable offer on his home. Every day he faces the possibility that someone else will come along and snatch his new home from him; someone who can make an offer without a home sale contingency.
Contingent offers have a limited time frame, and can potentially leave a seller at the starting gate, if his home is not sold within that timeframe.
Presenting an offer from a buyer to a “contingent” seller is one of my favorite scenarios. It is one of the few true win-win set ups. The seller is more focused on being able to get out of the starting gate and to the finish line. He’s chomping at the bit for the race to start and is genuinely happy to have received an offer on his home. The buyer usually doesn’t have to leap over as many hurdles, to get his offer accepted with a fair price and fair terms.
One of the tell-tale signs that you are dealing with a contingent seller is that the seller’s agent is from far away. When you see a Seattle condo listed by a Lynnwood agent, you get the hint that maybe this seller is buying new construction in Lynnwood. When you see an agent whose inventory generally consists of $700,000 homes in Lakemont, list a home in Kenmore for $450,000, you get the idea that maybe this seller has a contingent offer on a house in Lakemont.
Often buyers make the mistake of looking the seller right in the eye and asking “Why are you moving?”, the normal reaction being a look on their face that resembles that of a deer in headlights. As with all fact finding endeavors in the residential real estate market, it is better to surmise and test, than to point blank ask. When I suspect that I am dealing with a “contingent” seller, I call the agent and say I MAY be writing an offer and would like to know if the seller needs a specific closing date. Most often the seller’s agent will respond that the seller needs “closing plus 3”, so that the funds from his sale can get to his next transaction, and so the seller doesn’t have to move his things out of his house until that next transaction closes. This way I can quickly find out that there is a next transaction identified and that the seller cannot close unless he sells this house.
“Closing plus 3” is often identified in the mls, but it is by no means a sure sign that the seller is in a contingent contract. Closing plus 3 is used in divorce situations and almost any scenario where the seller is going to a rental, so you can’t rely on that fact alone to determine seller motivation.
Negotiating price and terms is generally a piece of cake when dealing with the “contingent” seller. The sticky point in negotiations with a contingent seller often becomes the washer, dryer and refrigerator, if they did not negotiate to receive those in their contingent sale contract, minor detail. When preparing and negotiating offers with “contingent” sellers, we are more likely to be looking over our shoulders for another buyer, than to be worrying about reaching a fair agreement with the seller.
Anytime you take too long getting from offer stage to signed around, you leave the door open for another buyer to swoop in and stop your negotiations in their tracks. Move forward with smarts and speed and wrap it up when the issues in dispute become minor and not worth losing the house over.
How much time does the seller’s agent have to respond to an offer once it’s been submitted? This is for the state of Georgia, not sure if laws/rules vary from state to state.
Larry,
The timeframe to respond is set by the parties to the contract and not “a law”. I don’t think any State has the authority over the buyer and the seller to that degree, as in “Seller’s MUST respond to buyer’s offer within x hours by Law”. But there is a legal timeframe, usually in the contract itself, when the offer will expire if no date is put on that line…usually 48 hours or so.
Laws usually are about licensee duties, as licensees are subject to more laws than consumers as a condition of licensing. The law usually says something like “reasonable”, the licensee must present the offer to the seller “within a reasonable timeframe once the offer is received by the agent”. Something like that in most States.
That being said a “reasonable” timeframe is generally considered to be not tonight, but by tomorrow night. It depends what time of day you submit the offer, but “tomorrow night” works most times.
Sometimes buyers will submit a great offer, with a very short time frame to respond, to avoid bidding wars…but that would likely be a full price offer with few contingency factors. Sometimes buyers will offer a low offer with a long timeframe, as in “if no one else offers better than this by a week from today”.
Relo woud be a good example of “Don’t expect a response until a normal business day”, if you make an offer on Friday late in the day…you likely have to wait at least until Monday, since most relo personnel who would sign it are Mon. – Fri. 9-5 workers, for the most part.
Here in the Seattle area, “a day” ends at 9 p.m., so if you say response by Tuesday, that means Tuesday night at 9 p.m., which allows for people to get home from work and then review offers.
Here in the Seattle area, 1-5 days equals business days, and 6 or more days equals calendar days, on all timeframes. This is more important when doing a Home Inspection addendum where 5 days equals 7 days, as putting 5 gives you the same timeframe, and looks better in the offer to the seller.
Offers specify an exact date and time like “Response to be by 9/15” Sellers never HAVE to respond by the time the buyer wants them to respond, of course. But the offer becomes “dead” and has to be “revived” after that time, and the buyer is not bound to the seller’s acceptance, if the seller accepts it after the timeframe even if that is 10:00 p.m. vs. 9:00 p.m.
Larry,
The timeframe to respond is set by the parties to the contract and not “a law”. I don’t think any State has the authority over the buyer and the seller to that degree, as in “Seller’s MUST respond to buyer’s offer within x hours by Law”. But there is a legal timeframe, usually in the contract itself, when the offer will expire if no date is put on that line…usually 48 hours or so.
Laws usually are about licensee duties, as licensees are subject to more laws than consumers as a condition of licensing. The law usually says something like “reasonable”, the licensee must present the offer to the seller “within a reasonable timeframe once the offer is received by the agent”. Something like that in most States.
That being said a “reasonable” timeframe is generally considered to be not tonight, but by tomorrow night. It depends what time of day you submit the offer, but “tomorrow night” works most times.
Sometimes buyers will submit a great offer, with a very short time frame to respond, to avoid bidding wars…but that would likely be a full price offer with few contingency factors. Sometimes buyers will offer a low offer with a long timeframe, as in “if no one else offers better than this by a week from today”.
Relo woud be a good example of “Don’t expect a response until a normal business day”, if you make an offer on Friday late in the day…you likely have to wait at least until Monday, since most relo personnel who would sign it are Mon. – Fri. 9-5 workers, for the most part.
Here in the Seattle area, “a day” ends at 9 p.m., so if you say response by Tuesday, that means Tuesday night at 9 p.m., which allows for people to get home from work and then review offers.
Here in the Seattle area, 1-5 days equals business days, and 6 or more days equals calendar days, on all timeframes. This is more important when doing a Home Inspection addendum where 5 days equals 7 days, as putting 5 gives you the same timeframe, and looks better in the offer to the seller.
Offers specify an exact date and time like “Response to be by 9/15” Sellers never HAVE to respond by the time the buyer wants them to respond, of course. But the offer becomes “dead” and has to be “revived” after that time, and the buyer is not bound to the seller’s acceptance, if the seller accepts it after the timeframe even if that is 10:00 p.m. vs. 9:00 p.m.
Larry,
One clarification, you said “how much time does the seller’s agent have to respond to an offer”…
The seller’s agent doesn’t respond to an offer, the seller’s agent has a timeframe to “present” the offer to the seller, usually defined as “reasonable”. The seller “responds” to the offer, not the agent, in a normal sale of property.
i have a question we made an offer on a bank owned home for less than the listed price how long do they have to respond &do they have to respond
To accept your offer they have as long as stated in your offer, assuming you filled in the blank for offer expiration date. If you didn’t they have a reasonable period of time to respond.l
They do not have to respond. They can respond untimely, which what would at that time be considered a counter-offer even if it had the same terms (because they’d be too late to accept).
I’ve stated in the past that I don’t consider the time limits to be all that significant, unless you want to accept. I even recently did an untimely response on the seller’s side and it turned into a pending.
chris,
Remember that a Bank is generally a 9-5 Monday through Friday operation. A good rule of thumb is to give them 5 business days to respond. Same with a relocation property.
Rarely do they not respond at all.
This is for Bank OWNED property and not for privately owned property where the lender needs to approve the short payoff.
chris,
Remember that a Bank is generally a 9-5 Monday through Friday operation. A good rule of thumb is to give them 5 business days to respond. Same with a relocation property.
Rarely do they not respond at all.
This is for Bank OWNED property and not for privately owned property where the lender needs to approve the short payoff.
The house next to ours (MLS 27165989) seems to have had a contingency offer on it for several months, which seems odd to us. Is there any way for us to tell who is on the other end of that offer?
You can call the listing agent over at Landmark. Often the sign will have a “sold strip” stapled to the post with the name of the agent/company who represents the buyer. It’s not too long, given the time of year it went contingent, etc…
Thanks – we’ll check w/ Landmark. Never been any sold strip on there, and they seem to still be showing the house, so that’s what has seemed so odd about it. Thanks much.
David,
Makes sense that they wouldn’t put a SOLD strip as the house will always continue to be shown when someone is in escrow with a house sale contingency.
Another buyer that does not have a house to sell in order to buy can “bump” the current buyer. The first buyer usually has what is called “a right of first refusal” where they have the opportunity to pull their contingency if another offer comes in. Some can’t remove the contingency and some can. Often no one knows until a second buyer comes in to try to bump them out of first position.
I made an offer on Jan 7, 2009 on a bank owned property. But We still havent recd any answers. Our agent doesnt even know why the bank hasnt replied. How long is too long?….and its still on the market. We offered asking price.