Here’s a conundrum that many sellers face, with many figuring, “Why bother?”
But let me throw a new wrinkle into the equation: do you allow a showing or a “purchaser visit” to the actual buyer of your condo, while the unit is sold conditionally?
What’s the upside? What’s the downside? That’s what I was discussing with a cooperating agent yesterday afternoon…
So let met set the scene…
You’ve sold your condo, conditionally, and we all know these things never fall through, right? Famous last words? Or the reality of our condo market?
You’re sold conditional on the review of the Status Certificate (the condominium’s financial documents, rules and regulations, reserve fund study, etc), and the buyer has up to 14 business days to firm up the deal, depending on when you actually receive the Status Certificate from property management (they have up to 10 business days under the Condo Act), and how long it takes for the buyer’s lawyer to review the documents.
So the day after you’ve put pen to paper and reached a conditional deal, the phone rings, and it’s your listing brokerage; they have a request for a showing on your property.
Do you allow a showing on your condo while it’s sold conditionally?
I’d say that the results are about 50/50 on this one.
Many sellers figure, “The condition is a rubber-stamp; my building is awesome, deals never fall through, and this is just a formality, so screw it – cancel ALL showings, and don’t allow any more. I want my life back.”
Other sellers figure, “The deal is only conditional, and it’s not guaranteed. The buyer still has an out, so I’d be nuts to turn away other potential buyers. I want to have a sold ‘plan-b,’ so let’s continue to allow showings.”
Like I said, it’s really 50/50.
I always advise my clients, “If you can accommodate the showing requests, then do so.” It might be annoying, and the chances that the deal firms up are about 97% (although I’ve only ever had one conditional condo sale fall through on out of several hundred), but you may as well allow showings, and although you might not keep the place as clean as before, and you may not fluff it right before the buyers walk in, you have nothing to lose but your time.
Having said that, I want to examine this in even more detail, as I alluded to in the opening of the blog post…
A refresher might be necessary here regarding purchaser visits. In the Schedule-A of your offer, you’ll include clauses and conditions to protect your interests as a buyer, one of which probably says something to the effect of, “The Seller agrees that the buyer shall be permitted to visit the premises on three (3) occasions at mutually convenient times, prior to closing.” This is for the buyer to go back to the condo while waiting for the deal to close, so he or she can take measurements or photos, pick paint colors, show friends and family, or just lie on the living room floor and fantasize about “the big day.”
Well, on Monday afternoon, I was given a non-confirmation of a showing request I’d made on a unit I had sold conditionally.
We reached a conditional agreement on September 27th, but we are still waiting for the Status Certificate, so my buyer’s lawyer can review the documents, give us the thumb’s up, and allow us to sign a waiver to “firm up the deal.”
We are currently what we refer to as “sold conditionally.”
But in the meantime, my buyer wants to move forward with her plans to renovate.
The deal is scheduled to close on November 1st, and my buyer wants to visit the unit with her contractor to make some final decisions regarding kitchen cabinets, tiles, paint colors, light fixtures, closets, and a whole whack of other things.
So when I received a non-confirmation of our request for a “purchaser visit,” I was a bit shocked.
I called the listing brokerage and the receptionist told me, “You can’t visit the unit until the deal is firm. You’re sold conditionally, and there are no showings allowed on the property by buyer agents, or purchaser visits by the buyer who has purchased the unit conditionally.”
I was shocked.
A decade in the business, and I have never come across this.
Some agents say it’s common, others agree that they’ve never heard of this. It’s simply uncanny how we can be so split.
I talked to the listing agent directly, and he’s a great guy – one of the most professional agents I’ve ever worked with, and we sort of played Devil’s Advocate with each other.
He said, “David – a purchaser visit before the deal is firm? That raises a bit of a red flag here, doesn’t it?”
I knew where he was going with this. He was afraid of a worst-case scenario.
Worst case: he allows a purchaser visit, to the buyer who has purchased the unit conditionally, and the buyer goes into the unit, changes his or her mind, and the deal falls apart.
I told him, “We’re moving forward with this deal, no doubt. We’ll review the Status Certificate when we get it, but in the meantime, my buyer wants to bring her contractor through so we can finalize the renovation details.”
The listing agent said, “Right, I totally get it, but again – what if your buyer’s contractor quotes $50,000 when he’d previously said $25K? What if he tells her that the job is too big, too small, to hard, or something else that causes him to leave her high and dry? What if, what if. See what I mean? See why I don’t want to expose my seller to this?”
It made total sense, and the “what if’s” or “worst case scenarios” weren’t over-blown. This savvy and experienced agent was simply looking out for his seller, and trying to avoid any chance that the deal fell through.
However, for those of you thinking one step ahead, it would not be unforeseen for me, or my buyer, to say, “Well, you either allow the viewing, or we will NOT waive our condition, regardless.”
I believe that’s what you call a “pissing contest,” if I’m not mistaken.
This is all hypothetical of course, since the listing agent and I worked things out with a conversation and a mutual trust, but let’s explore that what-if.
What if the listing agent said, “You can’t visit the unit because I’m afraid you’ll see something you like and you won’t waive your condition,” and the buyer said, “I won’t waive my condition unless you let me visit the unit.”
Well, then you have two people spitting at each other, each into the wind, if that makes sense.
It’s a Texas stand-off, with both parties working against their end-goal.
Is it a matter of who blinks first? In that what-if scenario, I suppose so.
In reality, I told the listing agent that we were closing in 22 days and we simply had to get into the unit in order to prepare for the renovation, and added that we wouldn’t be in this situation (ie. the deal still conditional) if we had received the Status Certificate a week ago; not that the listing agent had any control over that, in his defence.
He said, “David, I know you’re a good guy, and you’ll get this deal done, so I’ll allow it, but I’ll tell you something: there are a lot of young and inexperienced agents out there that would screw this up. There’s a lot of buyers who might change their minds, or use this as a tactic to try and get an abatement. It’s not worth the risk – Just an FYI.”
He then directed me to a clause that he puts in all his agreements, including the one we made with his seller:
“The Buyer acknowledges and agrees that any post sale access to the property is to be by appointment, with a minimum of 24 hours’ notice, and to be conducted only after the offer has been accepted and all conditions have been waived, but prior to five days of the date set for closing.”
That clause would supersede the one that we inserted in our Schedule-A, and if we really, truly, wanted to visit the unit with one of our “purchaser visits,” we would be out of luck if the seller deemed it so.
It surely wouldn’t be in their best interest to not allow us access, since we could say, “Screw you, I’m not waiving my condition,” but legally speaking they’d be within their right.
Call me naive, but if a buyer of a condo made an appointment to see a unit that he or she had purchased conditionally, alarm bells wouldn’t necessarily go off in my head. If the closing date was 120 days away, and this was three days after the conditional agreement was reached, then yes, I’d be concerned. But with the amount of time it often takes to “firm up” a deal, I don’t think these purchaser visit requests are uncommon.
Live a day, learn a lot…