Congratulations, you have sold your house! The buyers fell in love and made an offer, and you let out a big, big sigh of relief when the contract was signed.
Then it happens – another offer comes in, and a better one at that. And now? Can you take the highest bid? Here’s what home sellers need to know.
When is a sale a sale?
Although laws vary from state to state, in general, until this contract is signed by both parties, even after the counter-offers have been sent, all new offers can be considered and accepted. . Once both parties sign it, however, the seller is pretty much locked into the deal.
This is why it is so important that sellers are convinced that they want to accept an offer before signing.
“As a seller, make sure you are prepared to accept an offer and know that you may not be able to walk away from the deal,” says Jean Meyers, a real estate agent with Myers and Myers Real Estate in Albuquerque, NM. “It is absolutely essential that you as a seller understand the purchase contract and any counter-offers you are signing.
“Read the agreements to find out if you have any exceptions in the contract,” says Meyers. “Purchase agreements are legally binding agreements, and sellers must understand their commitments and their ability to exit the contract.”
Do you think you can get a higher price for the property? Then you need to make arrangements before sign the contract, says Bryan zuetel, lawyer and real estate broker at Esquire Real Estate in Orange County, California.
You can, for example, insert conditions into the purchase contract that allow you, as the seller, to continue to accept bids and the buyer to have the opportunity to match or exceed any higher bid. Buyers can also take backup offers (more on these options later).
“The process isn’t really over until the escrow is closed,” Zuetel says.
There are also things that can and do happen between when a home is contracted and closing that can give the seller options. For example, the buyer has specific obligations called contingencies, which include things like loan approval, home inspection, and a home appraisal. If the buyer does not meet these contingencies by a specified date, the seller can cancel the contract and accept another offer.
In addition, different states have different rules regarding contracts. For example, in New Jersey, even after acceptance of the offer and performance of the contract, it is not fully binding until a period of legal review has ended. The lawyer review allows the buyer and seller to have a lawyer read the contract within three working days (or an extended period depending on the agreement between the buyer’s lawyers and the buyer). seller) after signing and disapproving or making changes to the contract.
“As a seller in this case, you can still accept the other or the best offer as long as you are still being reviewed by a lawyer,” says Lukasz Kukwa, a real estate agent for Coldwell Banker Residential Brokerage in Westfield, NJ. “While this will cause some setback and sometimes not be considered the most ethical, a seller can legally accept any other offer until the attorney’s review is concluded, as the agreement is not officially under contract.”
For the most part, however, buyers withdraw from contracts more often than sellers. In most cases, sellers may be forced to accept the initial offer, even if they receive a better deal.
“A breach of contract could result in legal action which always results in the sale to the original purchaser under contract, unless the costs of going to court reduce the profit,” says Barry richard, a real estate agent with the EXITRealty Garden Gate team in White House, TN.
Can home sellers accept backup offers?
The only type of offer that a seller is allowed to accept when under contract with a buyer is a fallback offer. A backup offer places that buyer second if, for some reason, the original contract fails.
A backup offer puts sellers in a good position, and they need to communicate to the buyer’s agent that they have one, especially if the offer is substantially higher than the initial accepted offer, Richards says. He says this gives the seller leverage to, for example, deny certain requests from buyers, who might ask sellers to pay for repairs after the home inspection, make price adjustments based on the valuation of the home. house or allow an extension of the closing date due to lender issues.
Should Home Buyers Bother to Make a Relief Offer?
So if you are a buyer and find your dream home but it is under contract, should you even bother to look at it? Experts say that while you shouldn’t be holding your breath, you don’t have to set it aside completely.
“It never hurts to ask your buyer’s agent to inquire about the contract and how it is progressing,” says Richards. “Sometimes when a contract fails, a seller will rather negotiate with someone who has already done due diligence on their property rather than go back to the market and face more exposure.”
Whether or not a formal safeguard offer is drawn up is up to the customer, but Ryan gable, CEO of StartingPoint Realty in Chicago, says in most cases they don’t suggest it because it ties a buyer’s hands and blocks their home search.
“In our market [Chicago], it is generally better to continue the search for accommodation than to commit unilaterally to a seller who has already accepted an offer. But it never hurts to keep following a top pick that is under contract. You have nothing to lose and the time investment can pay off.
But back to sellers: yes, having more than one bid on your property is always a good deal, but that doesn’t always mean you can take the highest bid.
Sometimes you may need to leave a few dollars on the table, but if you work closely with your real estate agent and carefully consider an offer before accepting it, you can still celebrate the fact that your property has been sold and be. proud of the fact that you have honored the commitment you made when you accepted the original offer.