Collin County Homes and Contingent Contracts
When selling Collin County homes writing contingencies into the counter offers more frequent in a seller’s market than when in a buyer’s market. It’s not uncommon to see a seller ask a buyer for the right to find another home before fully committing to the sales contract. A lot of sellers worry that if they sell their current home without finding another one, they may end up their putting their belongings into storage and renting for a while. Selling a home is an emotional time, separating themselves from the past and looking into an unknown future. Contingent on Seller Finding “Home of Choice”Some purchase and sale agreements contain a single line making the transaction contingent on the seller finding a replacement home. The problem with that is, from the buyer's point of view, does this clause allow the seller to cancel the transaction at any time, even on the day it is scheduled to close? Few buyers would accept those terms if they knew what the clause meant. I have seen contracts that specified: "This offer is contingent upon closing concurrently with the purchase of the seller's new home." This type of verbiage is very vague and open ended. It is hard to believe that buyers agreed to this clause. Home buyers are also entitled to some protections. What happens if the seller can't find a suitable new home? Here are some terms that will help to protect both parties in the purchase and sale agreement: Make it Clear that the Contract is ContingentMake sure that your states in the contract that the offer is contingent upon the seller signing a purchase agreement to buy a replacement home, usually referred to as a Home Sale Contingency. Sellers should receive a fair amount of time, usually about 30 days to find a new home, at which time, the seller is expected to remove the contingency or terminate the contract. If the parties cannot agree on a contingent contract, the best options for the seller's are to either reject the offer or ask for a longer closing period such as 60 to 90 days. Specify Time Period for ContingenciesDetermine the day the clock starts ticking on all of the contingencies in the contract such as pest inspections, home inspections, lead based paint inspections and the approval of Home Owners Association documents and so forth. If written correctly the clock should not start on these contingencies until the seller has removed the home sale contingency to buy another home. The time clock for contingencies start the day after the sales contract is signed. Per federal law, real estate contracts regarding lead-based paint, give the buyer 10 days to inspect the home. Some inspection periods are longer. The specified day that an inspection period begins can be, for example, the day after the seller removes the contingency or any other mutually agreed upon day. Is Extending the Closing Date an Option?Get an agreement on the right of the seller to extend the closing, if necessary. Both parties could sign a contract with a 30-day closing, but if it takes the seller 15 days to find a new home, the seller may want the right to extend the closing allowing additional time to prepare for the closing of their new home. The primary reason for a closing extension is because it may take a full 30 days for the seller's new mortgage to be funded. Discussing these things upfront, and reaching a mutual agreement that is expressed terms in writing in the sales contract, will save everyone involved a major headache.
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