It seems like clients are always finding listings that they like online… only to learn that they already have offers when I check them out. Why is that?
When a property has a signed purchase agreement but the agreement is subject to a contingency other than financing it still shows active until the contingency is removed. Other buyers can still see the property for backup offers in case the first buyer cancels the agreement.
The most common contingencies include:
- Inspection – most inspection contingencies are removed within 1-2 weeks, but sometimes the purchase agreement is canceled as a result of the inspection; buyers are often reluctant to consider properties with this contingency because if another buyer walks away from the property after the inspection they think they may do so as well
- Association docs – buyers have 10 days to review association documents during which time the purchase agreement can be cancelled with no penalty; sometimes rules and regulations or the financial situation of the association cause buyers to back out
- Sale of another property – this used to be fairly common but is pretty rare in today's market; I just checked and only 63 of more than 16,000 listings in our Twin Cities market are sold subject to the sale of another property; another buyer can make an offer with this contingency and the chances are good the new offer can take the place of the contingent offer
- Third party approval of short sale – this has become the most common reason properties remain in active status for a long time after they have accepted an offer; the contract does not become binding until the seller's bank(s) approves the short sale, which usually takes 60-90 days and often takes longer; buyers can get tired of waiting or find another property before they get approval so these listings usually accept backup offers in case the original buyer backs out
Because so many properties stay on the market for months with an accepted offer with contingencies the MLS database available only to Realtors now indicates if there is a contingent offer on a property, as well as what kind of contingency it is.
If you are ready to buy NOW and don't want to deal with properties with contingent offers or want to eliminate only certain kinds of contingencies ask your Realtor to set up a search for you filtering out those contingencies.
In many ways it reminds me of about 10 years ago when it was a strong seller's market and we learned to call and ask if a property was available before requesting a showing. At least now we can tell the real status immediately… but it can still be frustrating!
I set up a search of active listings for a new client last week and saw the number of listings drop by half when I took out all those with contingencies!
Sharlene Hensrud, RE/MAX Results – Email – Twin Cities Buyer's Agent
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