Question: I am getting a full price, cash, BACKUP OFFER on a listing. We have completed the due diligence and agreed upon the inspection items on the primary offer. We are waiting for the appraisal to come in. My question is if the buyer counters on the appraisal — just say it doesn’t come in at contract price. CAN THE SELLER’S CANCEL THE EXISTING OFFER AND TAKE THE FULL PRICE, CASH OFFER?
Answer: The Seller cannot cancel without exposing themselves to possible penalties or litigation. See section 16.2 of the REPC. Section 8.2 covers Buyers rights should the appraisal not come in at purchase price. If that occurs, there usually is another negotiation. Buyer would probably either pay the difference in cash, or ask the Seller to pay the difference, or possibly get the Seller to split the difference. If Seller refuses to participate, then Buyer would have to decide to either pay it themselves and move forward, or they could cancel the agreement. At that point the Seller would be free to Accept the Back up offer as the Primary offer.
Here’s another question: I have a question about how to handle backup offers. Agent A has a listing that is under contract, and now Agent B has just submitted a backup offer. Do I need to have the sellers sign both the backup contract page, as well as the original REPC, or do they only need to sign the backup contract addendum? If they do sign the REPC, how do I indicate that they aren’t “accepting” the contract, but are merely placing it in the first backup position?