Non-contingent sales, explained.
- The four common buyer contingencies.
- What happens to the buyer's deposit.
- Why buyers inspect before they offer.
- How it keeps retraders and wholesalers out.
Fiduciary real estate · Part 2
Selling without buyer contingencies.
Buyers inspect before they offer, not after. For trustees, executors, conservators and professional fiduciaries, that one change can mean fewer surprises in escrow and fewer hard calls to defend later.
Watch
Should you sell without buyer contingencies?
Part 2 of Matias's guide to fiduciary real estate in Los Angeles. He explains how a non-contingent sale works and how he and his team set one up.
The basics
Four ways a buyer can walk away.
A contingency is a condition in the purchase contract that has to be met for the deal to close. In a standard sale, the buyer checks each one during escrow and can cancel if one isn't met.
1
Inspection
The buyer inspects the property and decides whether the condition is acceptable.
2
Disclosures
The buyer reviews the reports and disclosures and can cancel over what they find.
3
Appraisal
If the property appraises below the price, the buyer can renegotiate or cancel.
4
Loan
If the buyer's financing falls through, the buyer can cancel.
Standard sale
The buyer inspects after you accept.
- Inspections happen during escrow, with the house already off the market.
- The buyer then asks for repairs, a credit or a lower price.
- If a contingency isn't met, the buyer can usually cancel and get the deposit back.
Non-contingent sale
Buyers inspect before they offer.
- Every serious buyer does their homework while the house is still on the market.
- Offers come in with no contingencies.
- A buyer who backs out without a legal or contractual reason may lose the deposit.
Neither one is always better. Matias and his team recommend a structure based on the property, its location and condition, and where the market is.
How it works
The work happens before escrow, not during it.
It sounds backward, but it works. Most of the effort goes in before the house is ever listed.
- 01 / BEFORE THE OFFERInspect
Investigate the property and its condition.
- 02 / BEFORE THE OFFERReview
Read the disclosures and offer documents.
- 03 / MAKE THE OFFEROffer
Submit the price and terms with the homework done.
- 04 / AFTER ACCEPTANCEEscrow
Proceed toward closing, with court confirmation when required.
1
Paperwork first
Disclosures, reports and the forms buyers need to review are ready before the house goes on the market.
2
Market it widely
Full marketing reaches the real buyer pool, not just one investor.
3
Open it for inspections
Every serious buyer can inspect the property and do their homework before making an offer.
4
Offers, eyes wide open
Buyers already know the condition, so their offers reflect it from the start.
5
Level the field
When needed, a round of counteroffers gives the top buyers a fair chance to make their best offer.
6
Escrow or the court
We open escrow. When the court must confirm the sale, your attorney, if one is involved, asks the court to approve it.
Why it protects you
Fewer decisions you'll have to defend.
A fiduciary has to act in the beneficiaries' best interest, and may have to explain every choice later. A non-contingent sale takes some of the hardest choices off the table.
1
No repair-request calls
In a standard escrow, the inspection turns into a request for repairs, a credit or a lower price. Would you approve a $10,000 roof credit, knowing a beneficiary could question it someday? When buyers inspect first, that request doesn't come.
2
Fewer retraders
Some buyers make a high offer they never plan to honor. Once the house is off the market, they push for credits and price cuts. A buyer who inspected first has little left to push with.
3
Fewer wholesalers
A wholesaler puts a house under contract, then sells the contract to the real buyer for a profit. That profit could have gone to the beneficiaries. Broad marketing and the right paperwork help keep it with the estate.
Canceling escrow and putting the property back on the market is never a good idea. It's better to get it right the first time.
Matias Baker Masucci
Disclosures
You can't disclose what you don't know.
That's exactly why the work before the listing matters so much.
Exempt sellers
Exempt from some forms. Never from the facts.
Trust, probate and conservatorship sales can be exempt from some of the disclosure forms required in a standard sale.
But in California there's no such thing as "buyer beware." Every seller still has to disclose known material facts about the property. And you don't have to be an exempt seller to sell without contingencies.
Not for every house
Non-contingent isn't always the answer.
Some agents push one approach for every sale. The right choice depends on the property, its location and condition, and the market.
The goal is the best result for the beneficiaries, not a rule. Matias and his team walk you through the options before anything is listed.
Frequent questions
What fiduciaries ask about non-contingent sales.
What is a buyer contingency?
A condition in the purchase contract that must be met for the sale to close. The most common are inspections, disclosures, appraisal and loan approval. If one isn't met, the buyer can usually cancel.
What does a non-contingent offer mean?
The buyer has agreed not to make the purchase depend on those conditions. In a fiduciary sale, buyers do their inspections and review the paperwork before they make the offer.
Can a buyer lose the deposit?
Possibly. If a buyer cancels without a legal or contractual reason, the deposit may be at risk. The purchase contract controls, so your attorney, if one is involved, should review the terms.
Does an exempt seller have nothing to disclose?
No. Trust, probate and conservatorship sales can be exempt from some disclosure forms, but every seller must still disclose known material facts about the property.
Why let buyers inspect before they offer?
Their findings are already priced into the offer. You compare offers knowing the condition is understood, instead of waiting for a request for repairs, a credit or a price cut during escrow.
What is a retrader?
A buyer who makes a high offer with no plan to honor it, then uses the escrow period to push for credits or a lower price once the house is off the market.
What is a wholesaler?
A buyer who puts the property under contract and then sells that contract to the real buyer for a profit. That profit is money that could have gone to the beneficiaries.
Should every probate or trust sale be non-contingent?
No. It depends on the property, its location and condition, and the market. Sometimes a standard sale brings the better result.
Does a non-contingent sale still need court confirmation?
If the sale requires court confirmation, it still goes to the court, and other buyers may be able to bid more at the hearing. See Court Confirmation & Overbids.
Matias Baker Masucci is a licensed real estate broker, DRE 02054763, not an attorney. This page is general information, not legal advice. Talk to an attorney about your situation.
Selling for an estate, trust or conservatee?
Let's choose the right sale structure together.
Talk to Matias about the property, its condition and the market before you decide how to sell.
Discuss the PropertyPrefer to talk? Call (310) 776-5145