Rescinding Binding Contracts and Offers - Best Practices

[Corey Martin]

Real Estate Agent here. Ran into this situation, see if anyone can relate:

My client was looking to do 2 deals fast for a 1031 exchange. They initially put out 2 offers. This was Saturday morning with deadline Monday at 5 PM. Monday morning came and both offers were accepted but as they were getting this info, they found 2 different properties they liked better and had me put offers on those. They had me bind the contracts from Monday (the initial 2 offers that were accepted) while they put out the 2 new offers. The those were accepted and they wanted those instead. So I needed to then send termination documents to the first 2 offers. My best practice here was to call the agent beforehand to 1) give them heads up 2) give them a small explanation (so as to not reveal too much). 

I feel I didn't hurt the agents too much as I terminated fairly quickly and they didn't even have time to remove the listing and such. Also both properties did have multiple offers on them so they were able to pivot. However, this does do a bit of damage to my reputation and that's the last thing I want. I want to always have great working relationships with my fellow agents. 

How do you feel this could have been handled better? What's your best practice when needing to send a termination?

[Caleb Brown]

In my area your clients could still be risked being sued for not terminating due to a contingency. What I typically do(if there's a inspection contingency) is cancel due to inspections. You could call and see if they would sign a cancellation before going through that so you don't waste their time. If you are honest they'll appreciate that. Most likely I would have the EMD going to the seller in this case. Again it is riskier but most of the time they would cancel and move on with the sellers receiving the EMD. In future ones If you can be careful with doing a bunch of offers, the last thing you want is a law suit. Also when the buyer offers he should have the intent to close, why some investors get a bad rep for cancelling quickly.

[Corey Martin]

Quote from @Caleb Brown:

In my area your clients could still be risked being sued for not terminating due to a contingency. What I typically do(if there's a inspection contingency) is cancel due to inspections. You could call and see if they would sign a cancellation before going through that so you don't waste their time. If you are honest they'll appreciate that. Most likely I would have the EMD going to the seller in this case. Again it is riskier but most of the time they would cancel and move on with the sellers receiving the EMD. In future ones If you can be careful with doing a bunch of offers, the last thing you want is a law suit. Also when the buyer offers he should have the intent to close, why some investors get a bad rep for cancelling quickly.

 The one good thing is no earnest money had been sent or received yet. And thats exactly what I tried to do, be honest and forthright (to an extent, don't give too much client info away)

[Caleb Brown]

Quote from @Corey Martin:

Quote from @Caleb Brown:

In my area your clients could still be risked being sued for not terminating due to a contingency. What I typically do(if there's a inspection contingency) is cancel due to inspections. You could call and see if they would sign a cancellation before going through that so you don't waste their time. If you are honest they'll appreciate that. Most likely I would have the EMD going to the seller in this case. Again it is riskier but most of the time they would cancel and move on with the sellers receiving the EMD. In future ones If you can be careful with doing a bunch of offers, the last thing you want is a law suit. Also when the buyer offers he should have the intent to close, why some investors get a bad rep for cancelling quickly.

 The one good thing is no earnest money had been sent or received yet. And thats exactly what I tried to do, be honest and forthright (to an extent, don't give too much client info away)

I would still have them send EMD and it go to the seller.

[Corey Martin]

Quote from @Caleb Brown:

Quote from @Corey Martin:

Quote from @Caleb Brown:

In my area your clients could still be risked being sued for not terminating due to a contingency. What I typically do(if there's a inspection contingency) is cancel due to inspections. You could call and see if they would sign a cancellation before going through that so you don't waste their time. If you are honest they'll appreciate that. Most likely I would have the EMD going to the seller in this case. Again it is riskier but most of the time they would cancel and move on with the sellers receiving the EMD. In future ones If you can be careful with doing a bunch of offers, the last thing you want is a law suit. Also when the buyer offers he should have the intent to close, why some investors get a bad rep for cancelling quickly.

 The one good thing is no earnest money had been sent or received yet. And thats exactly what I tried to do, be honest and forthright (to an extent, don't give too much client info away)

I would still have them send EMD and it go to the seller.

 and you know clients are going to hate that. though I can explain the situation they themselves got put in