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  • Sales Contract Issue!

    I think I need an agent with a clue - however before going down that road here is the situation --

    Buyer A offers $200,000 with contigencies finance, home sale, inspection

    Buyer B offers $225,000 only inspection contigency

    Situation A

    If someone (buyer A) makes an offer on a house - with contigencies (finance, home sale, inspection) the selling party still is able to market and bring offers on that home. It would then be up to Buyer A to remove as many contingencies AND at least match the new buyer's offer in order to have any chance of staying in the running.


    Situation B

    Same as above except Buyer A only has to remove the home sale and financing contigency and never change the offer price.


    Which situation is the correct one for Wisconsin Law? I say A, my agent says B.

  • #2
    Have your agent give you some authority for his answer.
    “Be not niggardly of what costs thee nothing, as courtesy, counsel, & countenance.”

    --Benjamin Franklin

    Comment


    • #3
      You talk about an "offer" - if it is really just an offer, and you never accepted, then you are under no obligation to allow the offeror to increase his offer or remove contingencies. But once you accept the offer, you need to stop referring to it as an "offer". In that case, it is not an offer, it is a contract and if you don't like it you should not have signed it.

      I assume you mean you have a contract, not an offer. In that case, the answer is in your contract. If you accepted an offer that was contingent on specific things (financing, inspection, etc...), the contingencies are normally written in a manner that the buyer (and not the seller) can get out of the contract if the contingencies are not satisfied. Usually the contingencies only last a specified period of time (say, 30 days) and at the end of the time if the contingencies have not been met, the buyer must either waive the contingencies or allow the contract to terminate.

      In that respect, I would almost agree with choice "B" but even that is more limited than most contracts I have seen. If you (seller) and I (buyer) sign a contract for $200,000 subject to my getting a mortgage within 30 days at 6.5% interest and someone offers you $225,000 the next day, I would be shocked if your contract said that you could call up the buyer and force him to waive the mortgage contingency clause 29 days early.

      Although I have seen contracts written to give the seller the right, under certain circumstances, to accelerate the contingency clause, it is very rare and the contract was intentionally drafted that way. It is not the way it normally works.

      For more on the Wisconsin Residential Offer to Purchase (WB-11), you can read: http://www.wra.org/pdf/resources/offer_exp.pdf (PDF file).
      Last edited by dkstaub; 12-04-2006, 08:46 PM.
      David K. Staub (www.illinoisbusinessattorney.com)
      Forum posts are not legal advice, are for informational and educational purposes only, and are not a substitute for proper consultation with legal counsel.

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      • #4
        If you have an unaccepted Offer you do not have a binding contract and you can entertain any other Offers or accept any other Offer and any potential buyers can try and make their Offer as inviting as possible by either eliminating contingencies or by offering more money.

        Once an Offer has been accepted you have created a binding agreement subject to contingencies. If the contingencies are not fulfilled as per the agreement then the contract of purchase/sale comes to an end and you are then free to accept other Offers.

        In your situation, if you don't have an accepted Offer then B appears to be the better choice. If you accepted Offer A then you are bound to and have to ride it out hoping that maybe A won't be able to fulfill his contingencies.

        A dangerous practice is to accept and Offer thus creating a binding contract and then accept a second Offer contingent upon the first agreement falling through - definitely not recommended.

        Sometimes agreements have what is called a 72 hour clause. An Offer is accepted with contingencies. If another Offer is presented the home seller can enact the clause. This gives the first Offeree 72 hours to remove contingencies failing which the home seller is free to terminate the orginal agreement, refund the earnest money and accept the 2nd Offer.

        Steve @ www.buyingahouseandsavingmoney.com

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