Oct 2006 02

I was just scanning the Globes Boston.com and came across this article about home-sale contingencies.  Contigencies basically allow a buyer to backout of a purchase contract due to a previously agreed upon circumstance.  This will be of interest to both buyers and sellers to read since it affect both parties.

Read it and let me know what you think.  Also check out my thoughts at the bottom.


Last year, real estate offers made contingent on the sale of the buyer’s home stood little chance of acceptance due to record low inventories of homes on the market. Now, swollen property inventories are making the home sale market more challenging for sellers. And contingent sales are making a comeback in some markets.

You might be tempted to take a contingent sale offer if your house has been sitting on the market for months unsold. Before you do, be sure that you understand the pros and cons of this approach.

An advantage of accepting a contingent sale offer is that you know someone likes your home enough to enter into contract to buy it. Another advantage is that contingent sale buyers often pay more to entice a seller into accepting their offer.

However, a higher contract price is worthless if the deal never closes. A recent sale in the Laurel district of Oakland, Calif., was contingent on the sale of the buyer’s house. The deal fell apart because the sale of the buyer’s home collapsed.

Going back on the market, even though it’s due to no fault of the house, can be a tough stigma to overcome. This is particularly the case in high-inventory markets. Buyers tend to focus on new listings, rather than on listings that have been around awhile.

Contingent sale offers are riskier than non-contingent offers because they are dependent upon an event occurring over which you have little control. If your buyers aren’t realistic about the value of their home, you could wait indefinitely for their home to sell.

For protection, many sellers who accept contingent sale offers insist that a release clause is included in the contract. A release, or escape, clause allows the sellers to continue to offer their home for sale until the buyers remove their sale contingency. If they receive another offer before the sale contingency is removed, they can accept it in backup position, subject to the collapse of the primary offer.

The sellers then give the first buyers written notice that they must remove their sale contingency within a time period specified in the contract. This time period is often 72 hours. However, it can be any mutually acceptable time period.

Sellers who accept a contingent sale offer with a release clause assume that their home will continue to be shown to buyers. However, if there are a lot of similar listings on the market, you could find that your showings drop off significantly.

HOME SELLER TIP: To guard against waiting months for the buyer’s home to sell, your contract should allow you to cancel the contract if the buyer’s home isn’t sold within a certain period of time, say a month or so. You could agree to extend the time period. But, at least you can get out of the contract if it looks like it’s going nowhere.

Offers that are made contingent on the close of the buyer’s home sale are better than offers made contingent on the sale of that property. At least the buyers have an accepted offer, so you know that their home is marketable at a price they are willing to accept. However, there is always the risk of this deal falling apart as was the case example above.

Before accepting a contingent sale offer, find out as much as you can about the buyer’s home, its expected selling price, the anticipated list price and the demand for similar properties in the area.

By Dian Hymer

My Thoughts:

I thought it was interesting how some sellers are accepting riskier contingencies as compared to a year ago.  It really shows the dramatic shift from a sellers market to a buyers market.

Is it worth it to a seller take an offer with one of these bad-boys in it?  It really depends on your situation.  If you have had your home on the market for a while with little action as far as showings and offers go, then you have to take the chance.  But have your agent (or me!) put a reasonable time frame on it such as 30-60 days (depending on your needs) to protect yourself.

Oct 2006 02

Welcome to the Boston Condo Blog! 

My name is Nick Warren and I am the creator of this resource.  My mission is to inform Boston’s buyers/sellers/renters about the Boston real estate market, specifically luxury residential real estate and to hopefully become your agent!

Over the next few weeks I will be adding to this site to make it a fully functionable resource which you can depend on for helpful information about the Boston real estate market.  I will be updating multiple times a day so save this to your favorites and check back often!

I look forward to interacting with all of you so feel free to comment any way you wish!  The Good, Bad, and the Ugly, I will listen to it all and try my best to respond to every comment I get!

My promise to you is to always be honest, hardworking, informative, and looking out for your best interests.

Until next time, have a great night Boston!


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