When is a Ratified Contract to Buy Your House Not a Contract in Northern Virginia?

hand shakeIt used to be that if a buyer made an offer on a house for sale and the contract was ratified by both the buyer and seller it meant that both parties were acting in “good faith,” and we all respected the terms of the contract. Provided the buyer’s financing was approved, any home inspection issues were resolved to mutual satisfaction, and the property appraised the deal was “good to close.”  Things have gotten much more complicated and competitive, and buyers are much more educated about the buying process, and much more demanding than ever. Now it seems that more and more the “loopholes” in contracts allow buyers to not take making offers  seriously because they can always change their minds.  If we as agents can no longer rely on offers being made in “good faith,” where are we headed?

There seems to be a disturbing growing trend (not just in Northern Virginia, but throughout the country) where buyer agents are encouraging the clients to write offers on more than one property at the same time, and advising them they can always get out of one of the deals, even if the contract is ratified, for no stated reason, either at home inspection or when HOA documents are received.  This is a very specific strategy utilized by buyer agents for specific reasons, all “in the best interest of their clients.”

The professional standards of our industry require that agents write offers for clients who are making “a good faith offer to buy.” Buyers should always be advised that offers must be taken seriously, and made only if they fully intend to buy the property. Anyone in this business knows that there are two times a buyer can “walk” from the contract, either at home inspection or upon receipt of HOA documents.  Buyers who really want to buy, and sellers who really want to sell, with the help of skilled professional agents, can usually work through any issues and bring the transaction to mutually agreeable settlement.  Competition for houses can be difficult in Northern Virginia, especially in certain neighborhoods and school districts.  Buyer agents are under more and more pressure to meet the needs of their clients, and “strategy” is everything in getting them the house they really want.

However, agents who are willing to write offers on multiple properties at the same time, advising clients they can get out of an offer at any time on home inspection or HOA issues, need to fully understand that if you choose to use this strategy there are ramifications.

Try to put yourself in the seller and listing agent’s shoes when you deliver the news that your buyer has changed their mind. The seller has a ratified offer and is proceeding with whatever plans they have to move on.  They have taken their house off the market, and have possibly turned down other offers, probably with the advice of your listing agent who did the due diligence on the other offers.  Imagine their dismay when you advise them your buyer has “backed out,” and you give no legitimate reason, because their offer was not made in “good faith” from the beginning, leaving them wondering what is wrong with their house, and what they could have done differently.  Was it their listing agent’s fault?  Imagine their distress when their house is put back on the market and other agents and buyers think there is something wrong with it and don’t show it because your buyer backed out and increased the number of “days on market.”  Sellers have no way of making up the lost time and money when your buyer backs out for no reason! They sometimes wrongly fault their listing agent for not seeing it coming.

If you choose to go this route, full disclosure is imperative, including written acknowledgement from the seller and the listing agent.   Many listing agents are, in their attempt to protect their sellers, putting additional disclosures in contracts so sellers can make fully-informed decisions about accepting a buyer’s offer.

Do I think this will change?  Not really.  There will always be people willing to skirt the ethical issues of “good faith” offers.  But I do know this, the only thing we as agents have in this business is our reputation. The future of our business depends on it.  What you do comes back to you in ways you never expected.  The next time you have a listing will you ask yourself if the buyer is acting in good faith when you discuss their offer with your client?

 

 

 

 

 

 

 

 

 

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