Yesterday my cell phone rings. On the other end was an inquisitive voice stating she was sitting in front of my listing at 9654 XYZ Road. She said her agent told her the house was “sold” and she wanted to know why my sign was still up.
“Well,” I explained, “The house is actually under-contract waiting to close.”
“But your sign is still in the yard.” she protested.
“Correct. It will stay in the yard until the house is closed. Then I will have it removed.” I replied.
“Oh. Thank-you.” click.
This conversation got me to thinking how often we use words that aren’t technically correct. The caller’s agent told her the house was “sold.” When in fact it was “pending” or “under-contract.”
Pending is not sold
Pending and under-contract mean the same thing. When a buyer writes an offer on a house there is a period of time between the offer being accepted (under-contract) and the actual sale or closing of the house. That time can be a matter of a couple weeks to months.
During this time the buyer completes inspections and finalizes financing details. If there are items on the inspection the buyer and seller cannot come to terms on, the contract could “fall.” Actually the contract doesn’t fall, but rather buyer can opt not to purchase the house.
It is for this reason we don’t remove the “for sale” sign. The sign will stay up until the home does officially close.
One thing consumers may notice, a rider saying “under-contract” or “pending” might get attached to the sign. This typically lets the consumer know there is an interested party who is working toward purchasing the property.
It is important to note, a buyer can still place an contract on a property in what we call a “back-up position.” This would mean if the first contract did not work out, the offer in second position would than have a chance to purchase the property.
Is writing a Back-Up Contract wise?
Most listing agents and sellers LOVE having a back-up contract. It helps their negotiating position with the 1st contract and gives a feeling of security if the 1st contract doesn’t work out at least there is a “plan b.”
So as a consumer should you consider putting in a back up contract? Maybe.
Let’s work through this scenario. The seller has two contracts. The first contract just completed their inspections and they are now requiring the seller to do repairs. The seller can say, “no!”
This could force the buyers into accepting the house “as is” knowing that if they didn’t they would lose it.
Sometimes the buyers love a home enough and realize the only way they will get to buy it, is on the seller’s terms. This wouldn’t happen if the seller didn’t have a second contract.
So as a back up contract, you just helped the seller force the buyer to buy and you walk away empty handed.
Of course every situation is different. It could just as easily happen in reverse with a buyer who refused to go forward and walks away, leaving you with the house!
About the Author
Kristal has been helping buyers and sellers in Colorado since 1984. She enjoys sharing her knowledge of the Metro Denver Real Estate market via blogging and in person while driving around the beautiful Rocky Mountain town of Denver! For fun, Kristal enjoys shooting things with a Canon. Visit Denver Photo Blog