Explaining Contingency Offers To Real Estate Sellers-Localism Featured

With the market being as slow as it is, some real estate sellers may be desperate enough to consider purchase offers that are contingent on other sales. Unfortunately, this consideration sometimes stems from the misconception that their listing will still be readily available to potential buyers. But this is simply not the case!

As the listing agent of quite a few houses, condos, manufactured homes and vacant parcels, when another agent brings me an offer on one of my listings, with a contingency attached that involves the sale of another house, condo, manufactured home or piece of vacant land, I can always add a Right of First Refusal addendum. But that does not keep the listing fully active! That is the part most sellers don't understand.

Over the years, I've had many agents push their contingent offers on me and my sellers by saying we could still take backup offers. That much is true. But according to our Multiple Listing Service (MLS) rules, if the house is under contract (an offer has been accepted) it can no longer be listed in the "Active" category in the Daytona Beach Area MLS. And the "Active" category is probably the only category the other agents are searching. The house, condo or land that is contingent on another sale must be placed in the "Contingent" category.

• Now there is a minuscule possibility that a buyer will come along who absolutely must have a house in the specific subdivision, building or area where the contingent listing is located. And there's an even more minuscule possibility that there won't be enough listings from which to choose. And within these minuscule possibilities, other agents will include the "Contingent" category in their search, then proceed to call and ask me about the contingency. (I'll go so far as to say, I'd probably fall out of my chair if that happened in this market.)

To backtrack a bit, in a seller's market, agents included the "Contingent" category in their "Active" searches all the time. They did so because there was not enough inventory on the market. Out of desperation, they searched every nook and cranny to find a home for their buyers. But we now have 2.5 years of inventory in the Daytona Beach area MLS. There is absolutely no reason to include more listings in the search. If anything, agents are looking for a way to narrow down the possibilities. The buyers would be overwhelmed if we showed them everything that was available, not to mention the time involved in viewing all those available listings.

It's common knowledge that REALTORS® work together to sell listings in the MLS. Hard-working listing REALTORS® will even go out of their way to get other REALTORS® to show and sell their listings. But if that listing is no longer in the "Active" category, buyer's agents will not even know it exists. Consider again, we have 2.5 years of inventory in our active MLS listings right now! If a contingent offer is accepted, yes the seller can accept backup offers if their listing agent included a Right of First Refusal clause to the contingency offer. But that seller now only has one REALTOR® (the listing agent) working for them instead of 1.3 million. (1.3 million is the number of agents who are REALTORS®, according to the National Association of REALTORS®. These agents all have access to the IDX MLS, in addition to their local MLS.)

If you're selling real estate in Daytona Beach, Port Orange, Ponce Inlet, Ormond Beach, Daytona Beach Shores, Wilbur by the Sea, Ormond by the Sea, South Daytona, New Smyrna Beach, Edgewater or the outlying areas of east Volusia county, make a Smart Choice and contact Lisa Hill with Adams Cameron & Co., Realtors. You owe it to yourself to have a REALTOR® representing you who is not only experienced and ethical, but who will take the time to explain ALL the pros and cons, as we work together toward the sale of what could possibly be your biggest asset. Let's not forget, your REALTOR® should be able to work well with and have a good reputation among other REALTORS®, to ensure the maximum interest in your listing.

If you enjoyed this blog post, you might also enjoy my post titled "The Long and Winding Road to a Real Estate Closing".