Listing Agents Beware! Non-contingent sales obviously give sellers certain leverage over their buyers. Sure enough, some non-contingent sales work like a dream. However, others do not. As the listing agent, be careful not to give your sellers any false assurances concerning a non-contingent deal. For example, in a multiple offer situation, resist any urge to steer your seller towards accepting a non-contingent offer over the other offers, because you may later regret doing that.

Here are some quick tips to consider when working on a non-contingent deal: 

1. Educate Your Sellers: Advise your seller upfront that a non-contingent sale may not necessarily be a sure thing. Even if a buyer has no contingencies, the buyer may nevertheless have the right to cancel and get the deposit back, such as pursuant to the TDS law if applicable, and when certain things about the property are discovered during the transaction (see paragraphs 10A(6) and (7) of the RPA). Additionally, it might not be easy to figure out whether a particular buyer has that cancellation right in any given situation. That determination is ultimately made on a case-by-case basis as needed by a judge or arbitrator, not by us.

2. Don’t Chase After the Deposit: One common mistake in a non-contingent sale is when the seller and listing agent divert too much of their attention towards the seller’s entitlement to the deposit, rather than just focusing on closing escrow smoothly and successfully. For example, in a non-contingent sale, a seller may be reluctant to allow the buyer do an inspection, because new discoveries might give the buyer a possible way to cancel. But if we were to just focus instead on closing escrow successfully, we would more readily admit that most buyers want and need to inspect before buying. Allowing inspections helps to ensure that the buyer knows what the property’s defects are before buying, and will have no legal issues after close of escrow.

3. It’s Just an Entitlement: When a seller does become entitled to the deposit due to a non-contingent buyer’s default, it may not feel exactly like winning a jackpot. A seller in that situation is generally forced to grapple with many new challenges that perhaps can be avoided by just working something out with the existing buyer. Those new challenges may include figuring out how to properly cancel the deal, how to get the deposit out of escrow and into the seller’s hands, and what to do about whatever legal claims the buyer may try to assert. The seller may also have to decide whether to consult with or hire an attorney to get or keep the deposit. Additionally, the seller will usually be forced to find another buyer to buy the property, and go through the entire escrow process again. These new challenges may not be easy or straightforward to overcome, especially for hefty deposits.

4. Watch out for Game-Playing: Some buyers and buyers’ agents may intentionally submit what appears to be a non-contingent offer, but they have a secret plan for keeping the deposit if the buyer cancels. Examples abound. They may say they are submitting a “non-contingent offer” by inserting “zero” instead of 17 for the number of days for inspections in paragraph 14B(1) of the RPA. But that’s just zero days to inspect, not the removal of any contingency. They may also check the box for “Removal of Contingencies” in paragraph 14C, but intentionally fail to attach any Contingency Removal form as required. During escrow, they may purposely refrain from signing disclosures, escrow documents, and other things, or the buyer’s agent may withhold his or her AVID until the last minute. They may also plan to renegotiate or cancel if needed upon receipt of certain disclosures or reports, HOA docs, or other items.

Copyright© 2021 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of September 13, 2021. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.