My house is for sale and I’ve just accepted a conditional offer. What happens if I get another offer that is more appealing?
As a seller, you can entertain as many offers as you want — even after you sign a conditional offer. That’s because the sale is not final and binding on both parties until all of the conditions in that offer have been fulfilled or waived.
However, before you accept a conditional offer, you might want to think about giving yourself some flexibility to consider other offers.
One of the ways sellers have done this is by including an “escape clause” in the first Agreement of Purchase and Sale.
That type of 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 — to either waive or fulfil the conditions on their own offer.
If you decide to go that route, the second thing you would want to do is make sure the second sales agreement you sign has some form of condition based on the first agreement not becoming firm and binding by a specified time.
Such provisions at the negotiation stage might affect the buyer’s decision to continue to make an offer, but that’s something to discuss with your registered real estate representative.
Work with your realtor and/ or a lawyer to make sure the wording of such “escape” clauses is precise and captures any potential issues that may arise.
So, what happens if the first buyer waives or fulfils their conditions within the deadline stated in the offer? You as the seller would then be obligated to sell your home to that first buyer under the original terms of the offer.
If the first buyer doesn’t waive or fulfil their conditions, and this is confirmed in writing, then the first deal becomes null and void and you can go through with the sale to the second buyer.
The risk with multiple offers is that if you aren’t careful about including the proper terms and conditions in each agreement, you could end up selling your home to two people at once. We have seen complaints about this happening.
This would be the outcome if you continue to market your home after accepting a conditional offer but you don’t put a condition in the second sales agreement making that agreement conditional on your being able to get out of the conditional sale with the first buyer.
This is messy, to say the least, and it’s important that you seek legal advice should you find yourself in that situation. And, take steps up front to reduce the risk of it happening.
The potential for this risk is highest when the buyer needs time to sell their existing home and makes the purchase of your home conditional on that sale.
So, it is very important that you protect yourself with provisions in an agreement that spell out your right to look at other offers after you’ve accepted a conditional offer. The buyer, meanwhile, should be sure there is a “right of first refusal” clause in the agreement. This gives the buyer flexibility to waive or fulfil conditions to finalize the sale.
As always, these are simply general thoughts about what could happen. These are very tricky situations that could be very costly, so you should always discuss your specific situation with your real estate professional.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.