Home Buyer Questions Agent's Actions

: Richard Montgomery on Nov 19, 2024

Dear Monty: I made an offer on a home subject to the sale of my home. The sellers accepted the offer in writing. Two days later, the seller's agent called me and told me that the seller received a better offer from a buyer with a house to sell. He also said that the second buyer is now first in line to buy the house, even if my home sells first. Can the seller do this?

Monty's Answer: This is a concerning situation that depends on the specific terms in your accepted offer and your state's contract laws. Generally, if both parties signed the contract, the seller cannot simply take another offer and place it ahead of yours. This action could constitute a breach of contract.

The key elements to examine are:

No. 1: the specific contingency language in your offer.

No. 2: whether there was a "bump clause" that would allow the seller to accept backup offers.

No. 3: if proper notice requirements were followed.

Your Immediate Actions: a) Review your offer documents carefully; b) contact your real estate agent immediately to review the situation; c) consider consulting a real estate attorney, as this could be a legal matter; d) request all communications about this situation in writing; e) realize the seller's agent verbal communication has no legal standing compared to your written, accepted offer; and f) document all communications going forward.

Bump Clause Details: A home sale contingency is a standard clause that protects buyers who must sell their current home before purchasing a new one. Once accepted by the seller, this becomes a legally binding part of the contract. The seller typically has the right to continue marketing the property, but they cannot unilaterally void your contract or demote your position to second place without proper contractual provisions. Additionally, some contracts include a "bump clause" that allows sellers to accept another offer while keeping yours in place. This clause typically requires written notification of the new offer and a specified time period (often 48-72 hours) for you to either remove your home sale contingency or let your offer terminate. Without a bump clause, the seller cannot simply move another offer ahead of yours.

Potential Legal Implications: a) Breach of contract: This could be considered attempting to supersede your valid contract without proper authority. b) Potential damages: You might be entitled to compensation for expenses incurred. c) Specific performance: A court could force the seller to honor your contract. d) Bad faith dealings: The seller's actions might violate state real estate laws.

Recommended Next Steps: Gather all documentation, including your original offer; the seller's written acceptance; and any notes, text messages or emails. Request a written explanation from the seller's agent regarding the basis for accepting another offer and any contract provisions they rely on. Your attorney will want this data to offer an opinion. Consider pausing your home showings until meeting with your attorney.

You will have options to consider once you are fully informed. You may decide to pursue this home or not, decide not to sell or decide to get your home sold before you try to buy your next home. Based on your story, consider filing a complaint with your state's real estate commission if the agents involved are not handling the situation professionally.

Richard Montgomery is a syndicated columnist, published author, retired real estate executive, serial entrepreneur and the founder of DearMonty.com and PropBox, Inc. He provides consumers with options to real estate issues. Follow him on Twitter (X) @dearmonty or DearMonty.com.

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