Tuesday, July 5, 2005
Under Contract? Get Free Insurance!
I’m constantly amazed at the number of people who list their home for sale, get a contract, and immediately begin turning away interested buyers. So with this quick note, I would like to advise one single thing sellers can do that can, more often than not, make the difference between you scrambling around in pain at the last second because a contract fell through, or a perfectly smooth sale.
It’s simple: ONCE YOU HAVE A SIGNED CONTRACT, KEEP ACCEPTING BACKUP OFFERS.
Don’t turn away people who are interested in your home, even if you already have a signed contract with another buyer. Bad, unexpected things can happen. Financing can fall through. They can find something they don’t like in an inspection. They can have trouble finding a buyer for their home. These things can happen even to buyers you are very confident in. The sale is not complete until you both make it to the closing table and the transaction is concluded.
The best insurance to protect against a failed sale during the 11th hour is to have backup contracts in your hand, so if your primary buyer drops out of the picture you can go to the next in line.
Sellers in some states are already used to this due to the hot market - in some areas, it’s actually common to have buyers competing/bidding for a home (e.g. most parts of California) with their offers. This practice should be adhered to if you’re selling, no matter where.
There’s nothing complicated to it; just explain to potential buyers who call or e-mail that you’ve already accepted an offer, but that you are willing to accept backup offers if they are interested in the home. If and when you get a backup “Offer to Purchase” from a buyer, simply hold it without signing, and explain to the buyer that you will contact them a) when the primary contract falls through, or b) when the sale successfully concludes - that way the buyers are sitting indefinitely waiting for a home that sold weeks ago.
Accepting more than 1 backup offer/contract is no different. When you have multiple offers, as a seller there is no rule on which must be given precedence - you can choose completely arbitrarily which backup contract(s) to give a higher priority.
So sellers, when you get a call from some interested buyer and you already have a contract, don’t turn them away! It’s for your own good!
Michael Poythress
The FSBO Blog
