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Sold or Not Sold?
Question: We have received a postcard from a local real estate broker saying that the home next door was sold in just a few days. However, there’s no “sold” sign in front of the property. We’d like to know if the house was sold and for how much.
Answer: It used to be that real estate signs came in two flavors – for sale and sold. Today there is more signage and less clarity.
To start, we now have properties in some states that are “coming soon.” It’s unclear what this term means. Is the home now available for sale? Has it been listed? If the property is listed and the broker is an MLS member, is it in the MLS?
“Some ‘coming soon’ advertisements,” said the National Association of Realtors, “involve unlisted properties, which may or will be listed with a broker in the near future, while others relate to properties that are subject to listing agreements where property is available to potential purchasers only through the listing broker and not available, temporarily or indefinitely, for showing or purchase through other MLS participants. In either case, ‘coming soon’ properties are commonly withheld from the MLS.”
If we have a home that actually is on the market, then a “for sale” sign is appropriate. If the owner accepts an offer, then it’s fair to say that the property is “under contract” – an expression that means the owner also might consider a backup offer in case the first one falls through.
Some real estate agreements fall through. This can happen because an inspection is unsatisfactory to the buyer, the appraisal is less than the sale price, the buyer cannot get financing, etc. According the latest research from Ellie Mae, 70.5 percent of all loan applications sailed through the system in May, which also means about 30 percent did not.
Backup offers generally require some specialized contract language to work well. For instance, a buyer may have the right to invoke a “kick-out” clause, which requires the seller to accept the backup agreement within a given period, say 72 hours. If the seller cannot move forward with the sale, then the backup purchaser can withdraw from the agreement without penalty. This prevents the buyer from being in a financial limbo for weeks or months. For details, speak with a real estate broker or attorney.
Lastly, we come to “sold” signs.
Putting up a “sold” sign or sending out postcards prematurely can be a problem if the deal falls through and the property has to be re-marketed. An untimely sale announcement also can drive potential buyers away, including buyers with the ability to pay a higher price. A “sold” sign should mean the deal’s done and that all contingencies have been satisfied or removed, the property has gone to closing, the owner has been paid and the title has been transferred.
In the case of your neighbor’s house, the easiest way to find out about the status of the listing is to call the broker.
Peter G. Miller is author of "The Common-Sense Mortgage," (Kindle 2016). Have a question? Please write to firstname.lastname@example.org.View Foreclosure Article Archives
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