If I accept an offer on my home that is conditional on the buyer selling their existing home, can I still consider other offers in case they don’t sell their home?
As a seller, you are allowed to consider other offers when you accept an offer that is conditional on the sale of the buyer’s existing home.
This is because the sale of the home does not become final and binding until all of the conditions in that offer have been fulfilled or waived. To avoid any confusion, a good practice is to ensure that the conditional buyer is aware that you, as the seller, intend to continue to market your home to other potential buyers.
Before you accept that conditional offer, you’ll want to talk to your real estate representative about including an “escape clause” in the Agreement of Purchase and Sale with the first buyer.
The escape clause would require you to notify the first buyer if you accept another offer, and gives them a set period of time — for example, 24 hours — in order to meet the conditions on their own offer, or to walk away from the purchase.
The effect is that if the first buyer is unable to sell their existing home, for example, and this is confirmed in writing, then the first deal becomes null and void and you can proceed with the sale of your home to the second buyer.
However, if the first buyer meets the conditions outlined in the offer, you must sell your home to the first buyer under the original terms of the offer. This is known as the “right of first refusal.”
If you decide to use an escape clause, you should make sure that the second agreement contains a condition that the offer is accepted only if the first agreement falls through.
It’s important to note that such provisions during the negotiation stage may affect the second buyer’s decision to make an offer, but you can discuss the pros and cons of this approach with your sales representative.
In addition, if you aren’t careful about including the proper terms and conditions in each agreement, you could end up selling your home to two buyers.
RECO has received a number of complaints about this happening, and it can be a costly mistake. These types of disputes tend to settle themselves with one of the potential buyers being able to quickly complete the trade, effectively squeezing out the other buyer.
As you can imagine, this can leave consumers angry and disappointed. That’s why you should work with your representative, or seek the guidance of a real estate lawyer, to ensure the wording of both agreements is precise and pre-empts any potential issues that may arise.
And because the situation can evolve very quickly, you should discuss any developments with your broker or salesperson. They can help you understand what’s happening, and what might happen next.Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.