Putting your Vail Valley home on the market can be a complicated process with many legalities to navigate. It would come as a surprise to many potential sellers how early in the negotiation process they can become “locked-in” to a contract with a buyer. Can you accept a higher offer when once you’ve been locked into a contract? In a normal real estate transaction, the buyer is heavily favored. There are many protections built into the contract (called contingencies) that will allow buyers to back out of the purchase at multiple stages in the process. If something were to go wrong during the home inspection, appraisal, or if the buyer is unable to get a mortgage loan they can back out of the deal. Sellers are not so lucky.
Why would a seller want to rescind their acceptance of an offer? The most common reason is actually that they’ve received a better offer from another buyer. Are there circumstances when you can accept a higher offer when under contract? Not exactly, but let me explain.
Can You Accept a Higher Offer When Under Contract?
In the current market, homes are selling fast. It wouldn’t be unheard of for a home to receive multiple offers within days of going on the market.
Imagine you’ve listed your home, received two or three offers, and there is a deadline to accept the best of the three. You may feel pressured to accept that offer, you don’t want the house to sit on the market after all! But what if you accept that offer and the following day a higher offer in all cash is submitted? Of course, you’d want to back out of the first offer you accepted and take the cash offer, right?! Who could blame you? Unfortunately, in the real estate world, this could lead to a long list of legal problems that most sellers would prefer to avoid. Once you have signed a contract, as a seller, there is basically zero chance of reversing that decision after the fact.
What Are a Sellers Options?
Backing out of a signed real estate contract for the seller is risky and mostly bound for legal consequences. Sellers could be sued by the buyer by their agent, or a lien could be put on the property. If a seller wants to void the contract for any reason, they could face serious legal consequences. So what CAN the seller do? Consider all of your offers knowing that you can only pick one. Work closely with your real estate agent to understand the market and your pricing strategy before you list your home. You’ll want to consider your timeline for selling your home as well. Here are a few tips for getting the best price for your home but it’s important to work with a knowledgeable, local Realtor.
Accept the higher offer as a backup.
Although this is by no means guaranteed to work it could be a strategy to put pressure on the first buyers during the inspection process (for example not agreeing to repairs). But it’s risky… there’s no guarantee the second buyer won’t play hardball with YOU during the inspection and ask for more repairs to be made!
Ignite a bigging war.
When you’re entertaining multiple offers it is possible to divulge the other offers in the hopes of igniting a bidding war. This would allow the buyers interested in your home to counteroffer and outbid their competitors. You’ll want to work closely with your agent on this, and it may add days or weeks to the process. It’s important to consider your timeline for sale.
Once you have signed a contract, as a seller, there is basically zero chance of reversing that decision after the fact. It’s essential to work with a real estate agent who is familiar with the local market and can create a pricing strategy and plan that meets your needs. After all, the last thing anyone wants to deal with when trying to sell their home for the best price possible is a lawsuit.
How Can I Help?
I hope that you’ve found this information on whether or not you can accept a higher offer after you’ve gone under contract useful. Please reach out to me if you ever want to know more or if you are interested in buying or selling a home. I want to provide my clients with interesting and up-to-date information so they can make informed decisions. If you think that my expertise and positive attitude might be of service to you don’t hesitate to reach out and contact me.
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Coldwell Banker Global Luxury Specialist
Coldwell Banker Distinctive Properties