Sellers: If You Want It, Ask For It! - Part IV Source: Julie Garton-Good ©2001 As a motivated seller, you need to ask buyers for what you want. Conversely, it's important to stand your ground on what you don't want in a sales agreement---especially contingencies that could tie you to a prospective buyer for months. In this final installment of the series we'll discuss contingencies to avoid and concessions in lieu of contingencies that could help score points with the buyer. CONTINGENCIES TO AVOID: In a fever-pitched market, motivated sellers should avoid the following contingencies (or at least strongly discourage them) in sales contracts 1) Sale of buyer's current home: While perfectly acceptable (if not almost necessary) in a buyer's market, waiting for the sale and closing of a potential buyer's home is a coffin nail in today's seller's market. Yes, there are exceptions. But as a seller with your own time track of moving before school starts, relocating for a new job, etc., it makes little sense to disadvantage your plans by going with such a buyer (especially early in the marketing process.) A.Possible Concession: In lieu of accepting this contingency, encourage the buyer to obtain a bridge or swing loan against his equity in the house he's selling. This way he can close on your house and (depending on the terms of the bridge loan) usually won't face payments on that loan until his house sells. B. Additional seller tip: If you do choose this contingency, be sure to use a "right of first refusal" clause in the sales agreement. This allows you to keep the property on the active market; and should you receive another acceptable offer, you will notify the buyer (in writing) that he/she has "x" number of days to remove the contingency in the contract or forfeit the purchase (with the return of earnest money to the buyer.) The buyer buys time. You buy peace of mind that the marketing process won't be interrupted and you'll be free to consider offers from other prospective buyers. 2) Contingencies with unpredictable outcomes/ unknown timeframes: These seemingly innocent contingencies can end up costing the seller the sale (or dragging it out so long you wish it would fall!) These contingencies include obstacles often outside of both the seller's and buyer's reach. They can include financial settlements coming to the buyer (from a lawsuit, a relative's estate, etc.) or government-related delays (like removal of a previously-paid federal tax lien against a party.) Just when you believe the closing's within reach, another setback occurs with the seller the biggest loser. A. Possible concession: In lieu of bending to this contingency, if the problem is money-related, ask the buyer to find interim financing and repay that loan later with settlement proceeds. In other words, make it H.P. (his/her problem) not Y.P. (your problem!) If the problem is time-related, find out as much as you can about the problem before you make a decision to accept the offer (and take on contingency baggage.) Ask the buyer if you can interface directly with the person solving the problem (the attorney, the lender, etc.) and ask questions before making a decision. Input from a third party is often sufficient to shed additional light on how long it will take to solve the problem. B. Additional seller tip: If you do decide to take a buyer with this type of contingency baggage, make sure that you use the "right of first refusal" clause covered previously. Additionally, make sure weekly progress reports are enforced with the buyer (so that he keeps on top of the problem.) Finally, only extend the purchase agreement in small time increments (such as bi-weekly.) This will give you ample opportunities not to renew the agreement, should you so decide. In a hot seller's market, asking buyers for what you want (as well as stating what you don't want) is paramount for receiving the best possible offer with the least buyer hassles. Do yourself and prospective buyers a favor --- get specific!