Real Estate NewsContract Knowledge & The "Woo Factor" - Part II
Vital Components in the Contingency Purchase - In Part I of this article, we addressed why a strong knowledge of real estate contracts (especially their validity) plus constantly reinforcing your intent and strength as a buyer, is necessary for bringing a contingency purchase to a successful close.
But what if the seller decides not to keep negotiations alive should the first purchase agreement die? What aces can you play to stay in the running for the house you want?
Besides acting prior to the contract’s expiration, approach the seller in a timely fashion to make “amendments” to the existing contract. This denotes that there are several advantageous changes you want to make. “Amendments” give the impression that not much has changed other than the time frames involved for closing and you’re merely amending the paperwork to reflect those changes. As addressed in Part I of this article, all that’s necessary is to make the amendments on the original purchase agreement while it’s still “alive” is to obtain seller’s initials (with the date changed) on each item. Make sure both of you receive a completed copy, including any addenda.
Be advised that since you’re making “amendments” to the agreement, the seller may have a few of his own! He may ask (if not requested previously) that the property be kept on the active sales market; and should another acceptable offer be received, you would be given a predetermined amount of time to remove the contingency of your home selling or forfeit the purchase of the new house. This is called a right of first refusal and is common when an offer is contingent upon the sale and closing of another house. The seller benefits by continuing the marketing efforts but you’re kept in a first position as a buyer under the terms and conditions you negotiate.
There are other ways to sweeten the pot in order to keep the seller happy. Depending on what his/her hot buttons are, you might try increasing the price offered (being careful not to overpay for the property), whittling down the closing costs the seller would pay, and/or increasing the amount of earnest money offered to show continued good faith. Obviously, these would be incentives; but if none are necessary, “amend the paperwork” and consider yourself lucky!
If you want the seller to stick with you, being as realistic as possible about how and when your home will sell should help in the communications department. This could include providing the seller with a comparative market analysis (CMA) on your home to show that it’s properly priced, a marketing plan showing how proactive you are in getting the house sold as well as a summary of prospective buyers and showings to date. This should help convince the seller that you’re working earnestly to get your home sold and put money in his pocket.
As you can tell, contingency purchases are delicate balances of time, effort and good faith. Good luck in putting all on your side!