Tuesday, September 8, 2009

MLS Under Contract Types. We show all 3

Bottom line: Under Contract means almost SOLD. No need to email us and say "Is it still available? Can I see it?" It is not available for showings. It has a ratified contract on it with a serious buyer and closing might be days away. Favorite the home to sign up for an alert to be notified if it goes back to active.
There are three stages of Under Contract on the MRIS MLS system. At FranklyMLS.com we show all three.
In 22201 right now there are 55 homes for sale under some sort of "Under Contract".
- 4 are: Under Contract/KO (Kickout) (These are pretty rare, 10%)
- 33 are: Under Contract/NoKO (No Kickout) (These are the most common at 60%)
- 18 are just plain: "Under Contract" about 30%

Under Contract/KO (w/Kickout)
This means that the home for sale has a contract that has been signed by the buyer and seller. However there is some terms in it that make it a "KICKOUT."
For example, if there is a home sale contingency, the seller is effectively saying in the kickout: "Ok, you can keep in that annoying home sale contingency, but if we get another offer, we will give you 3 days to 'sh*t or get off the pot.' " So when the other offer comes in, the buyer has to decide if they want to take on the risk of not selling their home, or if they want to let the seller sell to somebody else.

The downside for the seller is when it hits this stage, it gets dropped from many MLS sites and agents and buyers stay clear of it. Which is a shame.

This type of contract is only for about 10% of the homes for sale. If you have a GREAT agent, they should be looking for these as well. They are prime candidates. Why? The buyer has already been beaten down on the price (which is not posted publicly) and now all you need to do is come in with better terms (read my blog on terms terms terms). Nothing is guaranteed, but you have a shot.

Under Contract No/KO (No Kickout)
This is the most common Contract type. It doesn't have a particular term in it that will allow a buyer to easily get kicked out. However there are still some contingencies such as a Home Inspection or HOA Docs or an appraisal contingency. So a home buyer can put in a back up offer on these. Many agents will not because they think it is a waste of time, but you can still do it. The best approach is to make an offer with strong terms (and maybe a tad higher, if you can find out the other offer amount) and make it clear to the seller that if the buyer so much as sneezes or asks for anything unreasonable, you will be there and close quickly and not be a pain in the neck. Then you might have a shot.
Note that you can pull a back up offer at anytime before it becomes the prime offer. Ie if you plan to offer elsewhere.

Just: "Under Contract" Regular
I added the word "regular." It is actually just listed on the MRIS system as "Contract."
Some agents are lazy and skip the first two steps and put it in like this. Why? It takes 1 more step to enter into the MRIS system when it has gone from one stage to another stage and they can get fined by the MRIS if they forget to update it.

Listing Agent tip: Never ever list it as just "Under Contract- Regular" Why? The MRIS system is whacked and it shows other potential buyer agents who the listed buyer agent is! Who cares? Why in the world would you want to tell the world WHO the buyer is, before you close? This is private information and MRIS should change their policy on displaying this (only on the back end).

UPDATE 10-25-2012, this post conflicts with my post on How and when to write a back up offerhttp://blog.franklyrealty.com/2012/10/backupcontract.html. So check that out too if you are die hard serious about a particular home.

Written by Frank

46 comments:

  1. Is there a way to distinguish between the different 'Under Contract' types on Frankly MLS? I have never seen a kickout mention with any property.

    ReplyDelete
  2. We are now live with showing the different types of Under Contract!

    ReplyDelete
  3. The explanations for KO and for No KO do not match the summary at the top (I think you have switched them). For example, below you say 60% are No KO, but above you say 10% are. You might also want to keep the order the same (e.g., KO, No KO, regular) for both lists to make it easier for readers.

    ReplyDelete
  4. What syntax is required to find properties that are Under Contract / with Kickout?

    ReplyDelete
  5. Hadn't thought of that... will set that up shortly and report back. See, you all take for granted, each and every slightest idea has to be specifically created and programmed.

    ReplyDelete
  6. By using "No Minimu" on your search page, I used to be able to search not only the properties for sale, but also the properties for rent.

    Now I don't see the rental properties anymore. Could you please add the feature back in?

    ReplyDelete
  7. I don't understand why 60% of sellers are doing No KO contracts if KO is an option? Wouldn't they want to have other opportunities to sell?

    ReplyDelete
  8. "Sh*t or get off the pot." Really? You couldn't find a better way to explain KO?

    ReplyDelete
  9. His name is Frank and he was just being frank with the explaintion. This is a awesome site and there is a lot of work that goes into it. Thanks for the site Frank!!!!

    ReplyDelete
  10. Thanks for a clear and practical explanation...I love this site!!!

    ReplyDelete
  11. I love this site too!! Very up to date. THANKS!!

    ReplyDelete
  12. What is the typical contract type for Short Sales? I heard that contingent KO is typically for situations where the buyer has to sell their own home first. If i am under contract as a first time homebuyer with a short sale that is contingent KO, should i be offended?

    ReplyDelete
  13. Frank,

    I believe your description for Contract/KO and Contract/NoKO is wrong. A home inspection is a contingency with a kick out. The contract gives each party typically 3 days after a home inspection to respond. If no response, the contract becomes a contract. If the buyer or seller responds, the other party has a right to void the contract. This is a kick out clause. I beleive you are mixing up some of your information, but perhaps I am wrong. A contract with no kickout is a contract with no contingencies. A straight contract is after all of the contingencies are removed in writing by both parties to the transaction. Even in such cases, the contract can fall through but the failing party opens themselves up to a failure to perform the contract accusation which they can then sue to enforce. It's not to say that one party cannot sue to enforce at any point along the way, however the likelyhood of success is greater when the contract is infact a contract...and no longer has any contingencies. I guess interpretations can be twisted anyway they like, but from what I've seen this is what the custom and practice dictate. I would be interested to hear your response/oppinion on this.

    ReplyDelete
  14. Re: Anonymous 2/17/10-

    The contract is what is "KO/NKO", not the contingency itself - in this context anyway. Home inspections will be a contingency on most (if not all) contracts, regardless of whether the contract is KO/NKO.

    The main difference is "KO" contracts allow sellers to accept offers and nullify the contract with Buyer #1 if another (perhaps more favorable) offer comes along. "NKO" contracts do not allow this (although backup offers may still be accepted in case one of the contingencies falls through).

    Basically, "No-KO's" give the buyer the assurance that their offer won't be passed up for a better one; "No-KO's" do not.

    ReplyDelete
  15. See above--
    Basically, "No-KO's" give the buyer the assurance that their offer won't be passed up for a better one; "No-KO's" do not.

    Isn't there an error in that?

    ReplyDelete
  16. Yes it should have been:

    Basically, "No-KO's" give the buyer the assurance that their offer won't be passed up for a better one; "KO's" do not.

    ReplyDelete
  17. How do I know if my contract was KO or NO-KO??? We signed papers (No realtor, straight cash deal on a foreclsoure) and the Sellers agent (Bank hired) Hardly explained anything to us. I noticed on the MRIS site it FINALLY after 10 is showing up as "Under contract-Regular" So we have no clue if there is a kick out option. We hate to call and ask because this bank hired realtor/agent is very rude and treats us poorly. We have already been threatened a few times that he would not sell us the property....Are bank hired forclosure agents not comission driven????

    How do I found out if there is a Kick out option? All I was told was that until the bank signs after us, anyone can place and offer.

    ReplyDelete
  18. Yet another reason to hire a buyer agent.
    The listing agent does NOT work for you and does not, and should not give you ANY advice. He is acting perfectly.

    As for whether it is a kickout, ask yourself if there are any contingencies that you might miss. If yes, then they usually give you 3 days notice (depends on the contract) to drop the contingency or drop the contract.

    Frank

    ReplyDelete
  19. I know the agent doesnt work for us, Nor did we ask him any advice! And we have no copies of the contract, so i have no clue if there are any contingencies. I hardly even knew what I was signing most the time.

    Your saying that him treating us like trash is him acting "Perfectly"....I dont think so!

    ReplyDelete
  20. I am saying this is what you get for not using a buyer agent. That is what my entire blog.FranklyRealty.com site is about.

    Contact his broker, or the head of his firm to demand a copy of the contract. They should have given that to you on day one.

    ReplyDelete
  21. "I am saying this is what you get for not using a buyer agent."

    This is still an awefule thing to say, I wonder if ALL agents any more are just mean and rude. So because we felt since this was a open and shut case, we DESERVE to deal with this.

    Thanks!

    ReplyDelete
  22. Every single deal seems easy up front. But they never are.

    Yes you should get a buyer agent. It might not even be too late. Tell the listing agent that you are going to have to get an agent and the bank will have to pay for it if he doesnt get back to you. If he tries to drop your contract..

    you should be raising hell over there, not just complaining on a message board as Anonymous

    ReplyDelete
  23. Awesome site. We put an offer on a house "under contract w/ko". The previous buyers were unable to perform and our offer was accepted within 48 hours. Had we not read the info on this site, we never would have looked at the house. Thanks!

    ReplyDelete
  24. why would a sellers agent change from "under contract W/no kickout" to under contract - regular?

    ReplyDelete
  25. Sometimes they put the No kickout when there is a contingency like a Home Inspection. Then after the home inspection, then it is just "under contract." VERY VERY confusing. There still is no way to "kick out" the contract, so I tell my agents to keep it as "Under Contract, no Kickout" but some agents change it to UC.

    In other words, UC is the next step after the UC/ with or without a kickout.

    ReplyDelete
  26. Is it legal for a bank to counter at a higher price after an offer has been placed on a short sale property for the actual advertised amount?

    ReplyDelete
  27. I am not a lawyer.

    If a home is a short sale, that means it is contingent on bank approval. So absolutely the bank can counter offers that come in (even if agreed to by the seller).
    Many times a listing agent will underprice a home to get a ton of offers, and the bank is like "no way, but we will take XYZ"

    Agents sometimes do this to buy time for the seller that is about to get kicked out of the their house.

    ReplyDelete
  28. We saw a house on Sunday 10/23/11 and submitted a contract on Monday morning 10/24/11. This is a short sale. The listing agent called us back today and said a lower price offer was accepted by the bank on Friday 10/21/11, but she did not know until Monday. She said the bank cannot take any additional offers so she cannot submit ours, even though the status is "Under Contract- w/ kickout". Is this correct by law or is there a 3 day period where the bank could rescind the approval of the previous contract on the fact that our offer is higher? Thanks.

    ReplyDelete
  29. I am not a lawyer.
    I know of no 3 day right to rescind.
    The bank can take as long as they want to accept or reject offers.

    Sometimes the banks don't care about higher offers, sometimes they care about terms like as is and home sale contingency, and FHA buyers.

    Also it sounds like somebody is not using a buyer's agent. Instead thinking they will get a leg up doing it themselves. Thinking that reading a couple real estate books or blogs, and heck, I don't need no stinking agent representing me... How did that work out?

    Get an agent that does this for a living. Don't try and reinvent the wheel.

    ReplyDelete
  30. We've been looking for a long time and finally found a house that is perfect for our family, so it's very disappointing to lose out this way. We do have a buyer agent- who submitted our contract- but no one's perfect. I respect your site and thought maybe, as an expert in real estate, you'd know of a way, any way, to help us make this deal. Thanks for your time.

    ReplyDelete
  31. "Favorite the home to sign up for an alert to be notified if it goes back to active." How do I do that? Do you mean "like" it on FB?

    I've been researching the Fredericksburg/Ruther Glen areas all day today. Found 2 homes that would meet our unique needs perfectly in great areas, but both are "under contract."

    There are others of interest, but I am not looking for a gated community with high HOA fees.

    ReplyDelete
  32. Email me directly from the feedback page on the front page of the site.

    So watch a home or make it a favorite there is a heart symbol, either on the top of the listing page near the price or on the page where you do the searching. CLick a heart and it will alert you if the contract falls out

    ReplyDelete
  33. I was told that if I agree to the seller's counter offer they would update the property status to "under contract" in the listing system immediately, but the seller needed two additional days before ratifying the contract. The status is still “Active” and they are telling me there is some delay before this will update. Is that true? Or, would I see the status change as soon as they entered it into the system?
    I have the property saved to favorites in FMLS. Other properties that I have had saved generate an alert when the status changes to “under contract”. Seems like the alerts I’ve seen in the past come out all times of day or night 24/7, so that leads me to believe that as soon as the listing agent changes the status it should update of FMLS.
    Thanks!

    ReplyDelete
  34. I wonder if you are even ratified and under contract. Do you have a copy signed by all parties? If not, you are not under contract and they can sell it to somebody else.

    I hope you have a good agent.

    But yes, we update every 15 minutes IF the agent updated the the mls.

    ReplyDelete
  35. We signed our side of the contract last night, the sellers signed theirs this morning, I received our ratified contract at 1026 this morning, I checked your site at 1115 and it was already updated as to being under contract! Love that!

    ReplyDelete
  36. How does one determine the price the property sold for?

    ReplyDelete
    Replies
    1. As entered by the Realtor in the MLS. We show the NET price, so sold price minus seller subsidy.

      Delete
  37. Frank,
    This site is awesome!!
    I would, however, like to comment on a couple features and I have questions as well.
    (1) Regarding Short Sales (SS)--is there a way to exclude SS? I have tried to type Short Sale in the "Exclude" box but I still get SS in my search results. Is there a way to have the property categorized as a SS, meaning a box that is checked if the property is a SS.
    (2) Why do some square footage appear and others don't?
    (3) Regarding sold data--Can there be an option for sold within 1 year and 6 months? Also, what is the radius of the solds (.25 mile, .5 mile, etc.)compared to the subject property?
    (4) Are you going to add a price per square foot for each property?
    (5) Can the phone number of the listing agent be added to the contact information? That would save some internet search time/frustrations.
    (6) I have not been able to figure out the "Distance from Address 1". Could you give a lesson on that option?
    Again--Thank you so much for the time you spend on FranklyMLS to help those of us that are looking for houses, but are not agents. It has been an invaluable tool! I know I've asked many questions, but I have been using your website for a while and wondered about some features that would help me personally in my search for my first home.

    ReplyDelete
    Replies
    1. Sorry for the Delay SMMc
      1) Hum, I don't think so. You might try -short. That might work. I don't think negative phrases work.

      2) Because Realtors don't put the information in. Some claim a fear of being sued for errors, some say they don't want to scare buyers off if it is too small.

      3) Nope, can't just see 6 mo and 1 year. There are usually so few per area that we keep it to a couple of years and let you sort by date. See it all and ignore what you don't want.

      Nope, can't search by radius. Sorry. Wish we could.

      4) Probably not. A few reasons. a) the agents rarely put it on and b) it really is a horrible way to buy in my humble opinion. Like a place with 2 parking spots, the price per sq foot skyrockets, incorrectly. Or a unit 7 floors up, has more value, but the per sq foot will seem off.

      5) I removed this on purpose. It was causing TOO MANY problems. Buyers should NOT contact listing agents. See the "don't contact a listing agent" link to see why. But if you must. If you really think I am loying and full of it, then be my guest. I left it on the mobile page, so click over to mobile and you will find it. Again, use your buyer agent!!

      6) Man of man, really? Please help me make this more clear. This is for you to put in ANY address. Like your work address. And when you search for any area like 22101, it will tell you in miles, in real time how far each home for sale is to your work. I guess I should blog on this if it isn't obvious.

      Want another tip? In full view, if you want to see the next photo, click anywhere in the right 50% of the image. Not just the > arrow, to go to the next image. Most don't know that.

      Hope that helps.

      Delete
  38. I've been following/favorited a home that was listed, sequentially as "For Sale", "Contract Pending/No Kickout" and finally, as "Under Contract" or just "Contract" - in early November. It went to contract very quickly.

    I would have guessed by now the seller would have closed on the house.

    It now comes up as "Under Contract" in some sites. But in other sites, it says: "No Information Available" OR "Not For Sale". And in other sites an explanation is given for the lack of information: "May Have Been Withdrawn or Sold".

    If sold -- it would/should be stated as "Sold". -- Am I correct?
    If withdrawn, why would it not be then be stated as: "Withdrawn from Market".
    Thank you.

    ReplyDelete
    Replies
    1. If no site shows it as sold, then it didn't sell. Sometimes a listing is flagged and removed by the mls for random reasons. Sometimes it doesn't get sent to our Site properly. Ask your agent with a mls #

      Delete