Contingencies: what, why and when?
A contingency exists as a way for the buyer to exit a deal or to reopen negotiations. There are two common types of contingencies: those relating to financing and those relating to the physical condition of the property. Whatever the type, for you the seller, contingencies mean uncertainty.
Financing contingencies
Your deal is conditioned upon a lender or other interested party supplying financing for the deal under certain terms. Since even pre-qualified buyers have yet to sign a loan deal, they may insist on, for example, an interest rate contingency. If for any reason they are denied a loan below a certain maximum, they are allowed to pull out of the deal. All-cash buyers are the only buyers likely to waive financial contingencies.
Inspection contingencies
It's perfectly reasonable for a buyer who loves your property to make an offer quickly, before a definitive inspection has been made. In this case, the offer should allow the price to be renegotiated (or the deal to be cancelled outright) if an inspection turns up an unexpected issue.
Keep negotiations calm
If you find yourself (or your agent) getting frequently upset during negotiations, making accusations of deception, or otherwise losing your cool during negotiations, it may be a sign that you haven't done your homework or need to find a new agent. Think cool, keep calm and collected, and remember that a sense of humor is your best defense in a heated negotiation. Ultimately it’s just a business transaction and any posturing or mindgames are intended to push you to act irrationally. Don’t do it.
A very low offer isn’t an insult, it’s a sign of interest. Offers and counter-offers are just positions, a possibility put on the table. For your position to be accepted as the actual value of the property, you will have to make your case, answer the buyer's concerns, and then simply say nothing more. A little silence (rather than airing your frustration or nervousness) puts the ball back in the buyer's court.
It's always negotiable
Every offer you see can be modified to make it a little better. Don’t just say yes or no, ask yourself what would make a bad offer acceptable and what would make an acceptable one great. Then ask! It doesn’t hurt to ask, so the saying goes, in a formal counteroffer or conversationally if you’re looking for a small adjustment.
Decide in advance what terms are most important to you so you can be flexible elsewhere. In other words, if you need to close by a particular date, you may need to offer a price adjustment or adjust another term important to the buyer.
Read the terms, re-read the terms, and read them again
You can be sure that a buyer has been painstaking in prepare an offer; be twice as careful when reading it. Consider each terms of each offer, not just the price. For example, will the down payment suffice? Is the buyer pre-approved or at least pre-qualified? Are major contingencies (discussed above) required? Remember that selling a house is a bit like buying a car: calculate total cost, not just the price in the window.
Broker/Owner
Continental Realty Inc.
DRE# 01422589
925-548-5461
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