School of Hard Knocks

Our daughter Jade is a Junior at Florida State University. Jade is a dual major of Commercial Entrepreneurship and Advertising. She is also a School Ambassador, giving tours of the campus. In addition, she works on a publication and took six classes this semester. Pretty impressive resume. But she might as well add a third major to the list, The School of Hard Knocks.

For Juniors, internships are important, and Jade was waiting for the offer she was told would come in for a summer internship in New York City. The problem was the email didn’t come in during the time she was told. Jade started to worry. We asked if she checked the junk bin…. There was the offer. Jade called to accept it, but they said they had moved on when they didn’t hear from her. The stark reality that this can be a cold world seeped in. Hard lesson learned and maybe the most important lesson learned.

I asked Jade what her contingency plan was. Huh? Plan B. The backup plan. Alternative solutions. Emergency – break the glass!!!

There is more to Jade’s story at the end of this article. Hint: It’s good news and she gave me a thumbs up on sharing because of the lesson learned.

We all need backups plans.

What if the starting quarterback goes down? Tom Brady was the contingency plan for Drew Bledsoe, and it worked out marvelously.

Pete Best missed a beat and Ringo stepped in as the contingency. A Starr was born. It all worked out for the Best. (4 puns in one!!!!)

Real estate has its contingency plans as well…

Making an offer with the contingency that another home sells is the biggest contingency we mostly face. From a Sellers point of view, the deal on the other side needs to be examined. I can’t tell you how many times one doesn’t even look at the offer!

1. How much money is down? The 5-10% rule is key.

2. Is the inspection period over?

3. Is there a loan on the house?

4. Is there a contingency on top of that contingency? (I’ve seen deals 3 deep once I dove into it. That’s a lot of dominos to fall).

Once examined, you want to make sure the Buyer will accept a Kick Out Clause. The kick out is exactly as it sounds. Another offer comes in and if the Buyer doesn’t waive all contingencies and puts the full deposit in full, then the secondary offer goes into effect. My advice, give the original buyer 24 hours maximum in the kick out. Any more time and you will lose the secondary buyer. I don’t like to accept backup offers if the inspection has not been done or the mortgage has not been approved. Check the addenda for other contingencies in the secondary contract including whether that contract is contingent on another contract. Check out our Contract with Backup and Kickout Clause Addendums.

Buyers of a home, planning on putting in an offer based on the sale of a home contingency, should have all of this paperwork in hand. Sellers really don’t want a contingency deal based on the sale of a home but the more the paperwork that is in line with full transparency, the better the odds-on acceptance.

Buyers also must be ready when they buy new construction. While that new build can take upwards of more than a year, they need to make definitive plans on what to do if their home is not sold. Talking with a financial advisor, bank, or other lending institutions or private investors who do hard money loans is key to having everything lined up. We have some of those if you need names.

If the Buyer walks away from a deal and you move out, what is the contingency? If the deal falls apart during inspection, what is the contingency? If the Buyer loses their job and can’t get a loan, what is the contingency? I’ve even had a case where a Buyer died, and the Seller needed the money for a new house. Backup plans must be thought about in case of any of these situations.

As for Jade, she refocused and got back on the horse. Like Ringo, she got “help from one of my friends“, Jason Stagman on a few leads. After three internal interviews and a test project, her assertive push nabbed her a job offer. And then another another company also offered her a position as well within the same day! Jade will be interning at a top advertising agency in Fort Lauderdale this summer. Her apartment is just blocks from the beach (perk of Florida versus NYC). She is super excited and we are super proud of her resilience. That’s a reminder to me – better check my email junk bin!