Austin TX Real Estate - Hill Country Austin Lakeway Homes for Sale: When Do You Remove a Purchase Contingency?

When Do You Remove a Purchase Contingency?

I was visiting a real estate forum yesterday, and the questions asked are always an interesting bunch, especially when they come from uneducated real estate agents.  There is this new agent who posed this question to an online forum instead of reaching out to his broker for the education.  Bright RED flags are waving right there!

The scenario: This agent has a buyer who has a contract on a property to purchase. This purchase is contingent upon the buyers' current house closing. The agent asked when he should remove the contingency as the listing agent told him he needed to.

The short answer?  AT CLOSING!!

real estate contracts contingencyBuyers and Sellers, please PLEASE make sure your agents know how real estate works as you don't want to be the guinea pig for their brand new real estate career, especially if they're too scared to approach their broker for help.

Let's review this situation. When you are selling your house and you want to buy a new one, the only way to protect yourself from two mortgages is to put your new purchase contingent upon the first property closing (even if you don't have a mortgage, you might not want the responsibilities of two properties).  If you waive your contingency for any reason, and the buyer on your current property doesn't close and fund, you don't have a way out of not closing on the second property without breaching the contract and going into default.

This new agent thought that since the inspection was completed on the property, that it meant the buyers were moving forward and the contingency should be removed, afterall, that's what the listing agent told him.  Shame on the listing agent to take advantage, though in his mind, he was probably just trying to protect his sellers.  All seasoned agents know that things can go wrong right up until the last minute, you just never know.

If your agent is encouraging you to waive your contingency, and you aren't comfortable with that, you need to have a conversation with you agent to make sure you're all on the same page.  Granted, if you can afford both properties and the seller has received another contract and has asked you to waive your contingency or else they "kick out" your contract, it's all about your comfort zone and whether or not you want that. You need to know what would happen if you had to put your house back on the market.

To sum up, arm yourself with education. Don't let your agent (or the other agent) bully you.  But also know that your agent giving you all the worse-case scenarios doesn't make them a bully, but they're trying to make sure you know all the negatives of what could happen. If you can sleep at night, that's all that matters, right?!

**Are You Packed Yet?**

donna harris Realtor Austin TX blog

Donna Harris, REALTOR®
RE/MAX Austin Skyline
www.DonnaHomes.com

Donna@DonnaHomes.com
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Austin TX Real Estate and the surrounding areas of Lakeway, Bee Cave, West Lake Hills, CedarPark, Round Rock, Spicewood, Circle-C, Steiner Ranch, and everywhere in between... Hill Country Austin TX Real Estate and beyond. Whether you're buying or selling an Austin home, I'll be with you every step of the way. 

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Copyright© 2012 By Donna Harris, All Rights Reserved. You may re-blog with links back to this post.
*
When Do You Remove a Purchase Contingency? * was first published on donnahomesblog.com.

 

Comment balloon 23 commentsDonna Harris • April 25 2012 06:54PM

Comments

Isn't this why new agents have brokers? Asking questions of that importance on a real estate forum is insane.

Posted by Marte Cliff, your real estate writer (Marte Cliff Copywriting) over 6 years ago

On target advice Donna. At all costs you don't want to find yourself and your family in that in between state and be homeless.

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) over 6 years ago

WOW what can I say to that other than thats spot on... also very scary

Posted by David Shamansky, Creative, Aggressive & 560 FICO - OK, Colorado Mtg (US Mortgages - David Shamansky) over 6 years ago

Donna

Your post is right on target, thanks for sharing your insight,

Good luck and success.

Lou Ludwig

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) over 6 years ago

You are right on.... I had a horrible situation where the buyer lost their buyer the day of funding, Fannie Mae shut down the lender right as we were waiting for funding. Terrible....but at least we had the contingency in place.

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) over 6 years ago

This is very good advice, these types of scenario's where you are juggling multiple closings where anything can really happen until you have confirmation that the closing took place, you don't want to put yourself or your customer in a situation where if a deal starts to fall apart they will be at further risk. 

Posted by Morgan Evans, LICENSED REAL ESTATE SALESPERSON (Douglas Elliman Real Estate) over 6 years ago

Great advice and nice post.  It's just sad that the listing agent would give that advice to another agent, are we not on all on the same team.  We do want to make sure we all get to closing.  It doesn't hurt to give advice to another agent, epecially if they're new to the business and I'm sure the listing agent knew that they were working with a newbie in the business.

 

Posted by Graziella Bruner, Associate Broker - Serving Wayne & Oakland County (NCS Premier Real Estate) over 6 years ago

Just recently, new agents in Illinois were able to get their broker's license piggy-backed on top of their new salesperson's license.  Without even one sale, these agents could open their own shops and start selling.  I can only think that this person might be someone like that.  (BTW, the Illinois license law has changed and one cannot do that anymore!)

Posted by Margaret Goss, Chicago's North Shore & Winnetka Real Estate (Baird & Warner Real Estate) over 6 years ago

Wow...that is pretty scary!

Posted by Christine Smith, Exclusive Buyer Agent & Attorney, Canton, MA (Buyers Brokers Only LLC - www.BuyersBrokersOnly.com) over 6 years ago

Donna -- the listing agent sounds like he might have been trying to take advantage of someone with less experience.  One would hope the new agent finds someone to mentor him -- since apparently his broker isn't.

Posted by Steven Cook (No Longer Processing Mortgages.) over 6 years ago

Typically, a contingency like that should have an "expiration date" so that there is no need to remove it if things go on too long. But in any case, the listing agent cannot remove the contingency unilaterally. Both parties must agree to modify the original agreement that they signed.

I get annoyed with pushy agents insist on a buyer signing off on an inspection contingency. The contingency will automatically expire in 10 days, or whatever the agreement says. But once inspections are done, the listing agent pushes to have it deleted. I, however, prefer that my buyer has all of the time he or she needs or wants to complete a contingency.

Posted by John Elwell (CENTURY 21 Bill Nye Realty, Inc.) over 6 years ago

Donna, This is pretty scarcy, they're so many things that can happen during a pending sale and a closing, agents really need to know all the ramifications and time-lines. If you don't ask your broker. 

Posted by Adrian Willanger, Profit from my two decades of experience (206 909-7536 AdrianWillanger-broker.com) over 6 years ago

Marte, That is one reason to have a Broker...

Gary, Homeless is not good...

David, Thanks!

Lou, Thanks!

Karen, OUCH!!

Morgan, Exactly!

Graziella, Nope, we're not all on the same team. One represents the seller and the other represents the buyer. The listing agent is probably looking out for his seller, but removing a contingency doesn't make it close any sooner if the buyer still can't buy it without selling first (though some can buy without selling).

Margaret, In Texas, you have to be licensed for 2 years before becoming a broker, and it's 900 classroom hours plus a class on how to be a broker.

Christine, Yep!

Steven, Yes, one would hope...

John, Yes, we have dates as well. As for the inspection contingency, it is customary in my market to remove the remaining contingency if the buyer has asked for ay type of repairs or concenssions and they have agreed to an amendment. What we try to avoid is going back and forth, finally agreeing to terms, and then the buyer still backing out. That's not "fair" nor "nice". If they agree to terms, contingency is removed and everyone moves forward.

Adrian, Being a new agent, this agent doesn't understand that...

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) over 6 years ago

Donna--I write in "Offer contingent upon the successful closing of (property address)" all the time for this very reason. When the home successfully closes, sometimes an hour before they close on their purchase, the contingency is removed!

Posted by Teri Eckholm, REALTOR Serving Mpls/St Paul North & East Metro (Boardman Realty) over 6 years ago

$3,000.00 and 6 hours. Take it or leave it. You don't need days and days to think about waiving your contingency as a buyer. And if you do and  you don't close, you're gonna pay my seller, especially if we tell another buyer no thanks!

Posted by Greg Nino, Houston, Texas (RE/MAX Compass, formerly RE/MAX WHP) over 6 years ago

As a newbie myslef i feel this guys pain, but I'm lucky enough to have a broker who walks with me every step of the way, we all started somewhere, you experienced agents can be a scary bunch !!! LOL

Posted by Heather Milbourn (South Beaches Real Estate Professional) over 6 years ago

Don't be afraid to ask if you don't know especially if you are a newbie.... that would have been a painful lesson to learn.

Posted by Mike Yeo (3:16 team REALTY) over 6 years ago

Brilliant advice!  I've seen deals fall apart the day before closing!  What should have been a "sure thing" fell apart due to lack of disclosure.  Major headache for the seller but even moreso if they have a purchase contingent on sale. 

Posted by Bryan Robertson, Broker, Author, Speaker (Intero Real Estate) over 6 years ago

I try to never remove contingencies as a buyer. Maybe when the file is closed I have the buyer do it to clean up the file. If you can get away with never doing it, then why do it? I've been through many deals and we never released them all until it closes. I'm sure someone here will say how terrible that is, but I'm just protecting the buyer.

Posted by Andrew Martin (REMAX Accord) over 6 years ago

So the agent is asking this online in a public forum? How crazy is that! Ask the broker. And if the broker is unavailable or cannot answer it -- find another broker. Now

Posted by Erica Ramus, MRE, Schuylkill County PA Real Estate (Erica Ramus - Ramus Realty Group - Pottsville, PA ) over 6 years ago

Donna - Things go wrong sometimes up until the very end.  The buyer takes a risk by removing the contingency.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 6 years ago

Wow, where is the broker?  This could be a real Big lesson for a newbie to learn.  

Posted by Kathy Stoltman, Ventura County Real Estate Consultant 805-746-1793 (Rockwood Realty) over 6 years ago

Thanks Donna for the reminder that we all need to know what we are doing, I have met plenty of new and old agents who knew a lot less than what they pretended to know.

Posted by Bob Crane, Forestland Experts! 715-204-9671 (Woodland Management Service / Woodland Real Estate, Keller Williams fox cities) over 6 years ago

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