One of the common things I have come across from people who are trying to sell a home by themselves, has to do with the sale of property condition, which that a buyer needs to sell their own house before firming up. Of course having a sale of property condition in an offer makes total sense. Be careful of how this is written in your offer though. Here is an example of a sale of property condition:
“This Offer is conditional upon the sale of the Buyer’s property known as 123 Any Street, in Anycity, Ontario. Unless the Buyer gives notice in writing delivered to the Seller not later than 6:00 pm on August 30, 2010 that this condition is fulfilled, this Offer shall be null and void and the deposit returned to the Buyer in full without deduction. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller within the time period stated herein.”
This is an exciting period when you have just negotiated a sale on your own without the help of anyone!! You quickly sign the offer because the price is great and you saved thousands of dollars in commission. Then you wait until their house sells. Easy Right?
What Happens if the Property Doesn’t Sell?
Ok it is has now been 2 months and the back up property has not sold yet, they listed privately because they too want to save Realtor commissions. Your closing date on your new home is approaching fast and you are getting nervous. You have even stopped showings on your current home because you had an offer and are proudly announcing that to everyone.
A few days later you notice that their listing is no longer viewable on the private sale website they used, so you call up the buyer and learn that they couldn’t sell it for the money they needed in order to buy yours… Now you have to start over.
How Can This be Avoided?
The thing that could have avoided this, was the inclusion an “escape clause,” which allows you to continue to offer your property for sale, possibly negotiate another conditional sale and then give the first buyer a time limit to firm up! (I won’t write that clause out here in this post, because I can’t hand you everything)
In the case above the Seller was locked into a deal and could not accept any offers. He had to wait for the other property to sell. He may have wasted valuable time, and even lost several other buyers.
The other thing was it didn’t seem like he investigated the buyers property to make sure the property was saleable. The seller also didn’t seem to have a good idea of what the buyer’s financial circumstances were like. Did he have a pre-approval? What kind of downpayment was available and where was this coming from? All of these mistakes could have been avoided if the seller had sought the help of a Realtor. This could cost you tens of thousands of dollars. Make sure you know what you are doing as a private seller, after all this is your largest asset!