A Solution for Home Buyers Facing a Contingency Release Deadline
A Sacramento real estate agent who represents sellers is generally vigilant about following the terms of the purchase contract and asking buyers for a contingency release upon the specified dates. Unless otherwise altered, buyers typically agree to release inspection contingencies, loan and appraisal contingencies by the 17th day. The listing agent is sometimes viewed as an ogre or a downright meanie if her seller asks the buyer to perform in accordance with the contract.
It’s not unusual after a request for contingency release for this listing agent to receive from the buyer’s agent a tirade of blistering words, mish-mashed together in a denunciatory nature, sounding as though the buyer’s agent is angry but lacks an ability to grasp the right words to get the point across. Sort of reminds me of Daffy Duck sputtering you’re despicable. The buyer’s agent generally ends the diatribe with the supposed justification of: I’m just protecting my buyer.
One can’t help but wonder that if an agent is protecting the buyer, why is the agent advising the buyer to breach the contract?
As a standard of practice and care for my clients, we send buyer’s agents an email notice as a courtesy the day before a contingency release is coming up. We ask politely to send us the CR form and remind the agent that a contingency needs to be released. In some cases, you’d think we asked them to strip naked and dance in the streets. Shield the eyes. Some agents have never heard of the contingency release. Some prefer to explode over it. Fortunately, most buyer’s agents respond in an appropriate manner. But some don’t.
If we don’t receive a contingency release, though, the next step is to ask our sellers if they want to issue a Notice to the Buyer to Perform. This gives the buyers 2 days to produce the document or the seller may have the right to cancel the transaction. Will the seller cancel if the buyer doesn’t perform? Some sellers will cancel the purchase contract faster than you can say sore losers shouldn’t talk to the press after losing at Belmont Stakes — especially if the sellers have backup buyers willing to pay more.
The biggest issue is generally not the inspection contingency that generates the reluctance, it’s releasing the loan contingency. Not to mention, there’s a whole ‘nother discussion as to whether a Small Claims Court judge would even award an earnest money deposit to a seller, but buyers and their agents don’t know that. The simple solution is if a buyer needs more time — due to the way loans are scrutinized with all the delays going on in today’s market — then the buyer, through her buyer’s agent, can ask to extend the contingency through an Extension of Time addendum.
It’s not the listing agent’s job, however, to tell the buyer’s agent what to do or how to protect the agent’s buyer. An Extension of Time (ETA), if agreed to by all parties, can extend a particular contingency period in the purchase contract. Stay in contract. Don’t breach it, don’t let it expire, stay in contract.