Pat Hune, Broker, 1st Southwest Realty, August 2018
A few years ago (before we entered the crazy seller’s market) I listed a house that had been a rental for several years. Overall the house was in fairly good condition. The sellers painted the interior, did some minor repairs, replaced the stove and put the house on the market. The issue was there was a funky smell prospective buyers could not ignore. The house was treated twice and the smell was finally gone. But the days on market were accumulating. Buyers started asking why the house had not sold. Another issue was the house was one of the few in the immediate neighborhood with 5 bedrooms, 3 full baths, 3 car garage and a pool. Looking at the comps the price did not make sense to the buyer’s realtors. The buyers were told the house was overpriced which was not true. The issue is the house was too unique to use a neighborhood comparison. Zillow’s value was nearly $100,000 less than list because of the much smaller surrounding homes.
After nearly 100 days on the market a contingent offer was received. Technically all offers have contingencies, i.e. inspections, buyers and sellers agreeing to repairs, appraisal and the buyers ability to qualify for the loan and have the cash for the downpayment and closing costs. Realtors don’t refer to these as contingent offers. Contingent offers are when the buyer has a house to sell before they can buy their next home. Phoenix is currently enjoying a seller’s market. Houses typically sell in a matter of days for close to asking price depending on the location and condition. Sellers don’t typically take contingent offers because there is no need in a sellers market.
In this case because of the uniqueness of the house, days on the market, the end of pool season and the prime selling season the sellers accepted the offer. However when the offer was first presented the buyer’s house was not yet on the market. I advised the sellers to wait until the buyer’s house was in escrow. Luckily the buyers received multiple offers on their current house and escrow was opened in a few days. Once the buyers house was in escrow the sellers accepted the offer.
The key when handling a contingent offer is a high level of communication between the buyer’s realtor and the seller’s realtor and both lenders. The realtor and the lender working with the buyers did an outstanding job of keeping me informed of the progress of the buyer’s sale.
If you are trying to buy a home contingent on the sale of your current home be sure your realtor and lender know how to handle the communication. If you are selling a home and accept a contingent offer make sure your realtor keeps you informed. If the buyer’s sale has a problem there are specific deadlines that must be followed to ensure the buyer’s earnest money is protected and the seller’s house does not stay off the market unnecessarily. In this case everything came together and was a win win for everyone.