How can a seller accept a home sale contingency versus a full price offer?

May 18, 2015

What influences home sellers at the time of choosing between prospective buyers can vary dramatically with their circumstances.

© 2015 Richard Montgomery

Reader Question: We are a novice homebuyer. We are also young and uninformed. Our agent is my aunt who was pregnant and due at any time. I found a house I really liked, but she couldn’t show it because of her condition. I had the agent from the office that had the house listed show the house to my husband and me. We were asked to sign papers to make the agent our agent. We declined, thinking we would not be obligated.

We decided we wanted to make an offer. She wrote the full price offer and submitted it. We got a call from the agent that showed it to us. He was upset and said we were to make the offer with him because he showed the house to us.

Two days later we were told our offer had been turned down. When we inquired why, they said that the owners had accepted another offer. It seems they accepted a contingent offer as the other buyer needed to sell their house first. Is it possible that they would take a contingent offer, and not a full price offer? We have not received any papers yet showing that they declined our offer. I feel that it was because of the mix-up and I am just sick. I really want this house. What can I do to fix this mess? How can I tell if they have done this out of spite? We need your help! Jayne and Jason B.

Monty’s Answer: Hello Susan and thanks for your question. Even with the detail you provided there are key facts missing to allow you a definitive answer. It is possible that you inadvertently are involved in a “procuring cause” situation ​between two​ agents about who procured the buyer, and subsequently, who should be paid. If the potential for a procuring cause conflict is the reason the agent encouraged the seller to accept another offer, the agent is violating the Realtor code of ethics and the law if they put their own interests ahead of the seller’s interests.

Many factors influence sellers reasoning

Your fear may not be the reason they did not accept your offer. There are many other possibilities that are most likely. For example, what if the contingent buyer agreed to pay a premium over the list price to induce the seller to accept their contingent offer? What if the contingent buyer and the seller have a relationship, like family, or coworkers? Or what if the seller values the extra time to move out a contingent offer may provide? It is all speculation and you may never know as the seller is under no obligation to explain their motivation to you.

Procuring cause protection

When you spoke to your aunt to request the showing did she explain to you that before you went to the home with another agent that to protect her commission, you must disclose up-front your aunt was your agent? ​If she did tell you, did you follow through? It is that up-front disclosure and acceptance by the other agent that should protect your aunt’s commission. If your aunt failed to instruct you properly then she suffers the consequences.

Write a backup contract

If the seller has accepted another offer​ there is not much you can do unless the contingent home fails to sell. You can write a backup offer now and wait to learn if your offer becomes primary. While there could be a dispute about which agent collects the fee it would be among the agents.

​You may be able to find a better house before knowing if you have another shot at this one. Many secondary contracts are written to allow the secondary buyer to rescind the contract if another home is identified before the primary contingency is removed. If you wait, and the contingent home sells, you will have lost time waiting​.

​You did not mention a pre-approval letter from a lender. This could be another reason a seller will favor one buyer over another. Here is a chance to get informed. Go to https://dearmonty.com/home-buying. This page outlines the entire real estate process that you will go through buying a home. By following the clickable steps and learn about each step before you get to that step, you will be far less likely to encounter problems. The problem you just experienced is a small problem compared to others you can encounter. ​