My wife and I were looking at houses. We found one we liked, but wanted to take a second look before we made an offer. Before we took that second look, an offer was made and the seller accepted. The house is “under contract”.
Upon this happening, my wife decided she really did love the house and wants to put an offer in. I explained that once the house is under contract, it doesn’t matter what offers we put in, the seller would be unable to accept since the contract has been signed.
She disagrees and wants me to make a fool of myself calling the realtor to make an offer.
Is she right, that the contract is so much mumbo-jumbo and we could still make an offer anyway, or am I right, that once the house is under contract our only hope is for the financing or inspection to cause the deal to fail?
The seller might take more of a hard line on inspection issues (no, I won’t fix that doorknob) if they knew you were interested and were offering more. So, I don’t think you’d be making a fool of yourself by making an offer. I wouldn’t get your hopes up, though.
It’s a backup contract. Sometimes the buyer can’t arrange financing, or dies, or one or another caluses in the contract can’t be fulfilled for whatever reason.
But it’s only a backup. Kind of like finishing second in the Miss America pageant.
A contract is a contract. However, home sales fall apart at the last minute all the time for lots of reasons. You can and should hope for a glitch and be ready to pounce. The odds are not with you, true. So think of it as both you and your wife being right.
I bought a house when the 1st deal fell apart. And when I sold a house, the loan was denied so I had to put the house back on the market and find another buyer. So it’s not that rare.
I am not a realtor, but a contract for real property must be in writing or have partial performance, such as a part payment, because of the statue of frauds. If the first contract was just an oral agreement, the seller can ignore it and enter into a valid contract.
Even if a contract is in writing, it may be subject to conditions, such as a satisfactory inspection or the availability of finance. If those conditions fail, the property may be back on the market.
Yes, I think it was Louis B. Mayer who said “a verbal contract isn’t worth the paper it’s written on…”
But in fact, an agreement on a sale is a contract, enforceable in a court of law. Once the buyer has offered and the seller accepted, then the only question is whether each has an “out” - as mentioned above, inspection issues, contingent on arranging financing, etc. However, it depends who has the veto right. If the seller says “I won’t fix that doorknob” the buyer might be ableto say “that’s OK, I’ll take it anyway”. (Apparently, according to my unimpeachable source on all things real estate, the Home and Garden channel, it’s not unusual for buyers to present a laundry list of inspection issues in an attempt to weasel down the price; “I’ll need you to fix the bricks on the corner or reduce the price by the $10,000 it will take me to do it”. But drop they may drop their demands if the other side refuses to reduce the price and they really want the house.
I suspect that deliberately frustrating the contract to back out of it can be litigated… depending on how much money one side wants to throw away. Probably not a good move.
But yes, the conditions on the buyer offer commonly include “if I can get mortgage financing” and “if I can sell my house”, either of which could fall through - and come with an expiry date (offer good until X.) It cannot hurt to make a second offer to buy, hopefully with the condition - “unless we find a better house before current offer is declined”.
Sometimes, a contract has a “kickout” clause, which allows a contract with a contingency (I don’t know if all contingencies count) to be kicked out if the original buyers don’t dump the contingency. I know they can be common if the contingency is that the buyer has to sell their current house.
I think some/most/all sellers would find a way to get out of the first contract if the backup offer is higher.
When dealing with a Realtor, the same is true of a written contract.
I’ve had 2 friends who made the first offer on a house, singed a contract, and made an earnest-money payment – only to have to raise their offer to match a higher-priced one that came in later.
And don’t bother making a complaint to the Realty Board – their review panel includes enough realtors or retired realtor that the deck is seriously tilted against you.
The original contract may fail, due to any number of reasons.
Make an offer; my office called a ‘backup’ or ‘contingency’ offer. Can’t hurt, and, you can withdraw at any time unless your offer has been accepted.
You can make an offer on anything that already has a contract on it.
You not only will not be ‘made a fool of’, but, the Realtor will love you; the seller probably will.
Make your wife happy, as well.
I just sole a property in Nevada. Wish I had a back up offer.
1st offer and contract buyer after inspections wanted to do too much repairs or drop the price too much. They canceled he contract for cause.
2nd offer came in at a lower price. We countered bring the price up some with the stipulation that buyer accept the property AS IS. He accepted. We ended up having to do some repairs. He could not get a loan with out doors or windows being repaired. There was a break in problem.
The property and 6 others were part of a CMA (common maintenance agreement) some what like a HOA but less power and restrictions. As properties were sold the new owners dropped out of the CMA (long story). We separated all the garbage, and landscaping so each property was billed separate. And divided the funds remaining among the three active members. But we did not formally in writing dissolve the CMA.
After the time for contingency clauses to be used and just before closing the buyer wanted me out of the good ness of my heart to pay the lawyer to dissolve the CMA. I told my agent no, if the seller wants to back out at this time he can, but he leaves his earnest money behind. I would go to Las Vegas do the repairs myself but security bars on all units. And get tenants and either keep the property of sell at a higher price.
We made an offer. How frequently does the original fall through? My impression is that it’s not all that common but other posters seem to have a different experience. What’re the stats?
One of my coworkers lost a house to a better offer that came in after the seller had already signed a contract with him. What could he do, really? It was a dick move, but his only recourse would have been in court, and then all his down payment money would have been tied up in the interim so he couldn’t put an offer anywhere else.
We were house hunting and I put I think 40 houses on a list to keep track of them. I’d say it was 5-10 that went under contract and back out while I’ve been watching.