Real Estate Question - Conditional Sale - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

newts · 10-30-2007, 11:24 AM

I'm currently marketing my home via Welist and I have secured a conditional sale on my property. The conditions are financing & most importantly that the potential buyer has to sell her home by a certain date to close our deal.

If I were to get another party who is interested in putting in an offer before my current buyer satisfies the conditions, I have a 72 hour clause where my current buyer has to waive her conditions and complete the sale. If she can't waive the conditions and close on the house within 72 hrs, the contract is void and I can pursue a deal with the new party.

So my question is, if I have another party who is interested in putting in an offer, how much information can I divulge to them about my conditional sale? Can I tell them how much my current offer is for?

I also have a feeling that my current buyer would not be able to satisfy the conditions within 72hrs (ie. she wouldn't be able to afford to buy my house & hold hers at the same time). Could I share this information with the new prospective buyer to reassure them if they were to put in an offer with limited conditions, that they'd have a good chance of scooping the house?

Can I also tell the new party the time frame for when my current buyer has to meet her conditions? Ie. "My current buyer has until Dec 1 to satisfy conditions and close the deal. If the conditions aren't satisfied by that date the house is no longer conditionally sold..."

I just need some guidance on what I can divulge if I were to be put in this situation. Thanks for your help.

4X4 · 10-30-2007, 01:41 PM

You can tell the potential buyers that you have a 72hr clause and that they can put in an offer. If the offer is less than the one you already have (or unsatisfactory in some way) then counter it. They'll get the message without you saying anything.
Never divulge anything that makes your bargaining position weaker.
And if what you're specifically asking is whether the law prohibits you divulging that information, I know that a licensed realtor is not allowed. As a private individual, you probably are, but it is of no benefit to you, so don't do it.

newts · 10-30-2007, 01:59 PM

Quote:

Originally Posted by 4X4

And if what you're specifically asking is whether the law prohibits you divulging that information, I know that a licensed realtor is not allowed. As a private individual, you probably are, but it is of no benefit to you, so don't do it.

Thanks for your reply.

I think that there would be some benefit for me to divulge that if the new buyers were to put in an offer which is competitive, that they would have a pretty good chance of scooping the house, based on my feeling that the existing buyer probably wouldn't be able to waive her conditions and would have to forfeit our contract.

I just think that a "conditional sale" might deter a new buyer from potentially making an offer. I just want to know if I could essentially say "nudge, nudge, wink, wink, I think you've got a good shot at punting this other buyer if you make an offer"

4X4 · 10-30-2007, 02:07 PM

You should still be actively trying to market your house because of the 72hr clause. Any potential buyers should know what the clause means (and if they don't, you tell them). But I think it's reasonable to assume that you accepted a price and terms similar to what you listed the house for. Under that assumption, it is also reasonable to assume that a potential buyer would offer around the same.
If they were to offer a little bit less, but that the deal goes hard after a one week financing and inspection condition period, it is a better offer. Otherwise, you risk the first buyer not waiving conditions on the last day of this 72hr condition period and your house looking like it hasn't sold because it sucks.

ken0042 · 10-30-2007, 02:26 PM

Quote:

Originally Posted by newts

I think that there would be some benefit for me to divulge that if the new buyers were to put in an offer which is competitive, that they would have a pretty good chance of scooping the house, based on my feeling that the existing buyer probably wouldn't be able to waive her conditions and would have to forfeit our contract.

Or, you tip your hand that you currently have an offer that not only has the 72 hour clause, but is also a weak offer that you would like to see beat. That tells me as the potential buyer to lowball; hopefully come in within a grand of the other offer and make you decide if the bird in hand is better than two in the bush.

That's my take on this.

urban1 · 10-30-2007, 03:05 PM

Be carful not to invoke the 72 hour clause and then lose both offers. That 2nd offer better be pretty solid with few or no conditions.

As a buyer if I know you have that 2nd offer but arent happy with it, I can come in above it, with the intention of knocking down the price after the home inspection. So unless you know your home needs little or no work becareful of this. Otherwise you can lose the first buyer and have the 2nd buyer put the screws to you.

How different things are today compared to a year ago? The reality of a buyers market is going to hit many people.

4X4 · 10-30-2007, 03:11 PM

Knocking down the price after the home inspection? Maybe if there's more than 1-2% of the value of the house in problems that aren't clearly visible. None of that "the shingles need replacing" BS. That stuff is obvious and the list price had better reflect that.

newts · 10-30-2007, 04:56 PM

Home inspection is not an issue as it is a fairly new house.

Ken, the offer on the table is not weak as it relates to the actually offer price, it's weaker due to the conditions that have been put in place.

I'm not 100% confident that one specific condition in my contract will be met by the condition deadline.

4X4 · 10-30-2007, 05:03 PM

Quote:

Originally Posted by newts

Home inspection is not an issue as it is a fairly new house.

Ken, the offer on the table is not weak as it relates to the actually offer price, it's weaker due to the conditions that have been put in place.

I'm not 100% confident that one specific condition in my contract will be met by the condition deadline.

How long is the 72hr condition? (relative to date offer written, date 72hr condition waived, closing date)

newts · 10-30-2007, 05:05 PM

Quote:

Originally Posted by 4X4

How long is the 72hr condition? (relative to date offer written, date 72hr condition waived, closing date)

About 45 days.

4X4 · 10-30-2007, 05:15 PM

45 days? You absolutely need to keep marketing the house. And definitely do not tip your hand any further than the fact that there is a 72hr clause. If you say that it lasts 45 days, that'll give a potential buyer an M-16 in negotiations. Telling them the price that will beat the other price will do no good to you. The potential buyers don't need to beat a price, they need to beat terms.
Ask yourself this: if a potential buyer would give you better terms (ie, no 72hr clause), would you accept a lower price? The answer is: probably, assuming that the price isn't too much lower.
If that's the case, then you certainly don't want to tell them what the first people offered. If you do, the potential buyers will offer ~1-2% less.

newts · 10-30-2007, 05:19 PM

Quote:

Originally Posted by 4X4

45 days? You absolutely need to keep marketing the house. And definitely do not tip your hand any further than the fact that there is a 72hr clause. If you say that it lasts 45 days, that'll give a potential buyer an M-16 in negotiations. Telling them the price that will beat the other price will do no good to you. The potential buyers don't need to beat a price, they need to beat terms.
Ask yourself this: if a potential buyer would give you better terms (ie, no 72hr clause), would you accept a lower price? The answer is: probably, assuming that the price isn't too much lower.
If that's the case, then you certainly don't want to tell them what the first people offered. If you do, the potential buyers will offer ~1-2% less.

Yes, this isn't about price...like you said it's terms. Good advice....thanks.

ken0042 · 10-30-2007, 05:37 PM

Quote:

Originally Posted by newts

Ken, the offer on the table is not weak as it relates to the actually offer price, it's weaker due to the conditions that have been put in place.

That is sort of what I'm getting at, you then go on to say:

Quote:

Originally Posted by newts

I'm not 100% confident that one specific condition in my contract will be met by the condition deadline.

So, let's put some numbers up here. You are asking $400K for your house. Buyer1 offers $395K with those conditions and the 72 hour clause. Now you tell Buyer2 that a strong offer will likely trump the other offer, and you have now tipped your hand that there's something you don't like with Buyer1's offer. Be it price, be it conditions, etc.

Buyer2 knows housing prices are starting to slump, Welist doesn't get as much exposure as MLS, and that you have an offer you'd rather cancel. If I'm Buyer2 I would offer you $380K with no conditions; armed with that info. Without that info, but knowing there's another offer on the table, I would offer $398K.

My 2¢.

newts · 10-30-2007, 06:18 PM

Quote:

Originally Posted by ken0042

Buyer2 knows housing prices are starting to slump, Welist doesn't get as much exposure as MLS, and that you have an offer you'd rather cancel. If I'm Buyer2 I would offer you $380K with no conditions; armed with that info. Without that info, but knowing there's another offer on the table, I would offer $398K.

My 2¢.

Sold...come on over and we'll write it up! Thanks for the perspective guys.

4X4 · 10-30-2007, 11:04 PM

Just want to chip in one more 'two pence'. You need a decent deposit to take an offer seriously. Even if buyer 'A' waives conditions, it doesn't mean a heck of a lot if the deposit is only $5,000 (unless it's a mobile home).
Upon waiver of conditions, there should be another deposit. The total deposit should be at least $10,000.