Bob Northern & Company
12540 Patterson Ave
Richmond, VA 23238
Tel: 804-708-9463 • Fax: 804-708-9467
Negotiating Your Contract
I have a home to sell. What are my options?

What is a first right of refusal, contingency and bridge loan.

Do you know what a "Contingency Sale" is? A "First Right of Refusal"?
How about a "Bridge Loan"? What's a "Double Move"? What is a "Seller Rent Back"?
A Contingency Sale is the way things used to be done. This sale was when the "Seller" of a property would take his home off the market for an agreed upon period of time in order to give the "Purchaser" an opportunity to sell the "Purchaser's" existing property. Many times the "Purchasers" and "Sellers" would agree on a period of 15 to 30 days to market the "Purchaser's" home. Often the "Purchaser" of the "Sellers" house was unable to sell the contingent home. When this occurred, the "Seller" would put his house back on the market. The down side is that the "Seller" lost a significant period of time he could have marketed his home to other potential buyers.

A First Right of Refusal was invented in order to allow the "Seller" to keep his home on the market during the period of time the "Purchaser" is trying to sell his present home.

The First Right of Refusal is a tool that allows a buyer to enter into a contract to purchase his new home contingent on him selling his present home.

The advantage of the first right of refusal addendum for the buyer is that it allows him to come to terms with the seller of the home he is trying to buy. It gives him the opportunity to put his present house on the market and sell it.

While the purchaser puts his home on the market for sale, the seller continues to keep his home on the market.

Another advantage to the buyer is that when a home has a first right of refusal on it, the listing agent must tell all other agents who want to show it that there is a "first right" on the property. Often potential purchasers pass on the opportunity to see the house because they are not certain that after they negotiate with the seller that they will ultimately end up with the home.

The reason this could happen is that the first purchaser who holds the first right of refusal has the option to remove the contingency of the sale of his present home and to present the seller a loan approval that is not contingent on the purchaser having to sell his present home in order to close on his new home. Usually in this agreement, the buyer is given a 24 or 48 hour period of time to remove this contingency and to provide the non-contingent loan approval to the seller. The down side to the buyer is that he can lose his new home because someone else was able to give the seller a contract that did not include the necessity of selling a home.

The advantage of the first right of refusal to the seller is that they can have their cake and eat it too. The seller is able to keep his home on the market to attract another buyer. If another buyer signs a contract, and they don't have a home to sell, they can very likely buy the house because more than likely the first buyer will not be able to remove the contingency of selling their home. Based on the first buyer not being able to perform based on the first right of refusal contingency, the seller will be able to void the contract with the previous buyer and proceed with the second buyer.
Click here to Continue to: Bridge Loans, Double Move and Seller Rent Back