Dear David,

About a month ago, we put an offer on a house that had been sitting on the market for awhile. The offer was conditional on the sale of our current home, and was supposed to close at the end of July. Our agent included a clause that would allow us three days to drop our conditions if the seller received another offer, or walk away from the deal. 

A few days ago, we received a good offer on our current house. It’s conditional on financing and inspection for one week. The owner of the home we are buying has also just received another offer, which puts us in a tight spot: we now have three days to drop our conditions or walk away. 

The timing is terrible. We are worried we’ll end up with no home, or two homes at the same time. Our agent wants to pressure our buyers into dropping their conditions early by sending them a mutual release, which feels risky. – WORRIED

DEAR WORRIED: In the heat of the moment, people sometimes lose track of where they are in the process. Let’s look at the positive aspects of the deal you have now: you are on the clock, but have until the end of July to work through the details; you also received a good offer on your current house after a short time on the market, which is a positive sign. With these things in your favour, using a heavy handed approach with your buyer will likely not serve you well. If you send your buyer a mutual release and they sign it, you no longer have a buyer for your home, and this puts you further away from being able to waive the conditions on the home you are buying. Your buyer is also not obligated to remove their financing or inspection conditions early, just  because the timing is uncomfortable for you.

Your agent could have avoided this situation in the first place by inserting a clause in your buyer’s offer that would give you some leverage if another offer came in on the property you are buying. This type of clause might require your buyer to firm up in a shorter period of time, or permit you to consider other offers. At this stage, pressuring your buyer creates more risk than it solves if you don’t have protections built into the agreement. 

It’s important not to panic. Take a careful look at the strength of your buyer’s offer, their financing condition, the inspection timeline, your ability to bridge finance if needed, and whether the seller of the home you are buying will give you any flexibility. Sending a mutual release to your buyer is not the solution.

PRO TIP: Whenever we prepare an offer for buyers that includes a Sale of Buyer’s Property clause, I build in a Plan B that we discuss long before the offer is signed. It usually includes looking at longer timelines, bridge financing options, backup financing, and what the buyer would realistically do if the seller asked them to remove their condition. Working through these options in advance prevents buyers from being forced to make an emotional decision under pressure. #Advice #AskDavid #TheNegotiator 

David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Moving? Get it right. Ask David today! Call or text 519-577-1212.