Sunday, June 29, 2008

Real estate editor Maryann Haggerty and columnist Elizabeth Razzi respond to a question adapted from a recent online chat.

Alexandria: A prospective buyer wants to write a home-sale contingency clause, with a 72-hour kick-out, in the contract for my condo. As I understand this, his offer becomes binding only after he has sold his current home. If another noncontingent offer is made, the contingent buyer has 72 hours to delete the contingency and proceed with the deal at the price specified in the contract. Under what circumstances would anyone consider such an offer?

Maryann Haggerty: Under the circumstance in which they want to sell the home. Sure, a contingent offer is less than ideal. But if you're selling a place that appeals to move-up rather than first-time buyers, your target buyers likely already own homes and need to sell them to afford yours. The contingency-with-kick-out allows you to keep marketing your home while the buyer tries to sell his own place. It may be the best offer you can get.

Elizabeth Razzi: But you do take a risk by accepting it. Other buyers will see that your home is "under contract" and move on to other prospects, despite the kick-out. With so many homes on the market now, why bother with a house that's already kinda, sorta but not-quite sold? Maybe you can convince them to accept a counteroffer that has no home-sale contingency, but which puts off the closing date by three or four months, which would allow them time to market their home. At a minimum, insist that the kick-out be removed after a few weeks, so you're not tied down forever.

The next Real Estate Live chat will be 1 p.m. July 11.