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Just because your home is UNDER CONTRACT doesn’t mean it’s SOLD!

We have all heard “it’s not over until the fat lady sings” and it real estate it’s not over until the check clears the bank.  From start to finish there are a lot of things to be done when listing and selling a home. 

Rodney Camren, Star Team Atlanta

But once your realtor brings you an offer most sellers believe their home is SOLD and ready for that Under Contract sign to be plastered over the real estate sign in their front yard.  But wait a minute, please; an agreed sales price is just the beginning!  

When a buyer presents a contract for a seller to accept and purchase their home there are usually contingencies.  What are contingencies? They are conditions in which if met according to the determined contingency, the buyer will proceed with the purchase of the home.  There are many contingencies in real estate contracts. The majority of the time if the time-sensitivity is not meet or extended accordingly the buyers earnest money will be in jeopardy.  When it comes to earnest money as a seller you want the buyer to put down as much as possible.  This will ensure their sincerity of wanting to purchase your home.  Right now in Gwinnett real estate, we are seeing 4 main contingencies all the time, all of which are time-sensitive.  Those four contingencies from the buyers include inspections, appraisal, financing and the sale of a home.  

When you as a seller have accepted a buyer’s terms and conditions of a contract a binding date is placed on it.  From that binding agreement date, the buyer has so many days to get each contingency met.  The due diligence period is when the buyer does all their inspections.  Since Georgia is a “Buyer Beware” State when purchasing real estate, it is the responsibility of the buyer to do every inspection possible.   Some home buyers just do a general home inspection, which generally will cost a buyer out of pocket $350 – $600 upfront and no refunds if the contract falls apart. This type of inspector will come into the home and test everything and give it a general overlook.  If she notices something out of place or having problems then she will recommend someone to come out and inspect that particular item who may be a licensed professional of that area, i.e. plumber, hvac technician, electrician, etc.  The usual time frame of the due diligence period is 7-10 days, however, many agents will ask up to 14 days to see if they can get that amount of time.  For any reason whatsoever the buyer can walk away from the contract and retain their earnest money.  What you need to remember is that when you go into the binding agreement you are no longer allowed to market of the show the home to other potential buyers.  So, if your potential buyer’s time is not managed well you as a seller could lose a lot of marketing time just waiting on the buyer to get the inspections and determining what they want to do about the inspection.  Once the negotiations of the inspection have either been agreed upon or not will determine if you are off to the next contingency and that is usually the appraisal contingency.

Appraisals are tricky right now and very subjective.  Before the real estate market crashed, it seemed whatever the number on the contract (regardless of how bogus everyone knew it was) it would come in at the appraised value.  This is considered one of the problems of why our real estate markets crashed.   Now appraisers are blindly selected and the rules of appraising homes are stricter.   This is also an upfront cost to the buyers at usually $500.  If the home appraisal comes in lower than the negotiated sales price you as a seller have to determine if you will lower the price to the appraised value or decline the reduction.  If you decline the reduction of the negotiated sales price at that point the buyer has to make a decision.  The buyer will decide if they want to terminate the contract and as long as the buyer has done so in the contingency outline they will get their earnest money back.  The other option the buyer has is to pay out of pocket the difference from the appraisal.  The reality is a bank isn’t going to give a buyer a loan for more than what the determined value of the home is worth.  The bank wants to be sure if they need to take the home back from the buyer that they can at least get their money back.  Believe or not banks are in business to make money and when you see a “truth in lending” report for your home loan you will notice they make a lot of it.  The usual time frame for an appraisal contingency is 21 days but again all these dates are negotiable.  Most buyers don’t want to spend the $500 appraisal fee until they are finished with the due diligence period to make sure the homes condition is up to the buyers standards.  Hopefully, your home will appraise and then final stage will be the finance contingency.

In most cases the real estate agent will make the appraisal & financing contingencies on the same day.  However, I have seen this go out as far as 28 days.  During the financing contingency, the buyer is turning in more and more paperwork.  The lenders are reviewing debt to income ratio’s, reviewing tax records and processing the loan.  Then just before closing, they will double-check the file on things like credit and employment.  It is so important that the buyer doesn’t change a thing during the binding agreement to closing.  Sometimes a buyer will be so excited about the purchase of your home they will go out and open lines of credit to buy new furniture or a new car.  These are big no-no’s and will cause your buyer to not qualify for the loan.  There are also unknown surprises that can happen at the last minute.  In my 14 years of real estate, I have seen many last-minute mishaps that cause a loan to fall apart in the financing contingency and it is one of the last contingencies needing to be met in the transaction.  

The fourth one is really a new and recent one in play more than ever and that is the Sale of a home contingency.  Many homeowners are realizing that home prices are close to what they need to get out of their home and buy the dream home they really want, downsize, move closer to family or move to a beach.  At this stage of my life I want the beach in Brazil!   Homes are selling so fast that most of the sellers buying a new home don’t want to move twice.  But most people don’t want two mortgages either and most Americans don’t qualify to hold two notes. They have found the next home but want those sellers to know and accept before they can buy they need to sell their home first.  So what does this mean for you as a seller?  It means that you are willing to agree to take your home off the market and allow the buyer to go through all the contingencies above twice, once for your home and once for the buyers home (wherever that may be).   This may be something to consider as a seller if your home has been on the market for a very long time.  It could be considered if it were a buyers’ market, but it’s not, it is still a sellers’ market.   When you look at it there are a lot of moving pieces.  Are you willing to participate in all those moving pieces when next week you could get another offer without this contingency?  If anything falls apart on the other home during any of the contingencies, your home and its contract now are in jeopardy as well.   

Selling and buying a home is exciting, exhausting and rewarding.  Don’t take your buyers contingencies lightly as if you do it could be costly for you as a seller.  It’s the day of closing and all parties are at the table signing the documents, you get a check in hand (which is always better than bringing one to the table when you are a seller) my advice is to have your banks mobile app and deposit the check before you leave the closing table and then listen for those melodious notes to start ringing in your ears. 

To reach Rodney Camren please call (404) 375-1496 or email

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