The Real McCoy: Will buyers’ dream end in a flash?By: Kari McCoy, Special to Gold Country News Service
Our agent has been showing us homes for over eight months and we finally gave up the dream of being homeowners. We could not find a home that seemed suitable for the both of us. If I liked it, he did not and if he liked, it I did not. After several months went by, our agent called and said that she found the perfect home. Begrudgingly, we met our agent at the home and it was just as she stated – “perfect.” My husband and I agreed right away and we wrote a full-price offer. Two days went by and then our agent called, saying the seller had issued us a counter offer. The price was not the issue for the sellers, but they put in a clause that took us aback. Our agent said the sellers had accepted our offer yet they wanted us to wait 45 days to allow them time to find a replacement home. We asked what happens if the seller does not find a home they like and we end up waiting the 45 days to no avail? Our agent said at that point, the deal would be off. We cannot express how shocked and angry we both were when he heard this news. I have never experienced such nonsense. Is this legal or ethical? Have you ever heard of such deceitful dealings?
I can completely understand your extreme frustration and the feeling of being mislead. To answer your question in short, this is not illegal. Additionally if you ask a seasoned Realtor who has been in the business for awhile, they would tell you this is unusual but they have come across this situation many times in their career. When the seller wishes to sell their home subject to them finding a replacement home, the listing Realtor will make this information known up front. To be fair to the listing Realtor, sometimes sellers have been known to experience sellers’ remorse and may not want to sign a contract no matter how attractive the price and terms.
To help us understand the sellers’ side, let’s first take a normal buyer-and-seller scenario. Mr. and Mrs. Seller have outgrown their first home as they now have another child and also their much loved mother-in-law resides with them. The sellers’ contact their Realtor and list their home. Along comes Mr. and Mrs. Buyer with their Realtor and a full-price purchase offer. The buyers must sell their current home as they are using their current home’s equity for the down payment monies for their new home. The Buyers’ Realtor will need to add a contingency clause which will allow the buyers time to sell their existing home. Sellers typically do not like to accept an offer of this nature, as it means they must take their home off the market while being left uncertain of the actual completion of the transaction.
Savvy sellers will insert a clause in the form of a counter offer which is referred to as a “kick-out” clause or 72-hour release clause. Many folks view the kick-out clause as a compromise and it has become an acceptable practice in the industry. Keep in mind the time frame of the kick-out clause is negotiable and sometimes it has been known to be granted for up to five weeks. Under this provision, the sellers can accept the contingency contract and still continue to market their home. In the event that another buyer comes along with an acceptable offer and it is not subject to another home selling, the seller can accept it pending the option of the first buyers. The first buyers will then be given their notice to remove the contingency of their current home selling with the agreed upon time frame. If the original buyers do not remove the contingency, then their contract is canceled and all deposit monies will be returned to them.
So back to the flip side, the seller is already comfortable living in their perfect home, yet they only need more square footage to accommodate their new needs. Their fear is they will not be able to find a home that meets their new criteria and financial budget. This is the reason some sellers may find it necessary to list their home for sale subject to them finding a new suitable home that meets their needs. The risk for the buyers is that the sellers may not find a new home to fit their needs and they would not be obligated to sell their home at all. Generally, the drawback for the buyers is losing precious time while waiting as they may miss the chance of making an offer on other homes that are newly introduced to the market. However, in your particular case, you and your husband have already stopped looking for a new home. It would make sense for the both of you to wait the 45 days with no money to lose. I wish you the best.
This information is to answer the question above. For accurate information contact an attorney.
Kari McCoy owns the Kari McCoy Group, residential real estate at Lyon Real Estate. Email her at firstname.lastname@example.org or call her at (916) 941-9540.