Understanding Listings with Right of First Refusal

November 21, 2023

In a dynamic market, assessing property value can pose challenges. When appraisals differ, and parties struggle to agree on a valuation for property division, a viable approach is to consider listing the property for sale. This method allows the determination of value based on what a ready, willing, and able buyer would pay in the current market conditions.

Contingent on the offers generated by the listing, a party may opt to exercise the right of first refusal, purchasing the other party's share based on the highest offer received. In the determination of fair market value, aligning with what a ready, willing, and able buyer would pay, this approach offers an equitable solution to the challenges associated with establishing fair market value.

 

Potential Problems:

  • MLS Disclosure: The MLS mandates disclosure rules for listing status. If there's a 'buyer in waiting' with preferential access to other offers, it must be disclosed. However, this disclosure may impact buyer interest, potentially affecting demand and property value.
  • Listing Agreement: A listing agreement constitutes a contractual commitment from the seller to compensate the broker upon property sale. Parties may also be liable for commissions in case of a buyout, necessitating a potentially costly appraisal process.
  • Counteroffers: Obtaining an offer is one step; finalizing the sales price involves negotiation. Clarifying whether the right of first refusal is on the initial offer or the negotiated sales price is crucial, with potential financial differences reaching tens or hundreds of thousands of dollars.
  • In-spouse Sabotage: When the occupant seeking a buyout is also the resident; conflicts of interest can arise. This situation may lead to declined showings, a poorly maintained property, or the occupant negatively influencing potential buyers during showings. Such actions can be perceived as market manipulation, suppressing demand, and diminishing property value.

 

In Conclusion:

As a licensed real estate agent in California with over 19 years of experience and a designation as a Certified Divorce Real Estate Expert (CDRE), my role is to assist couples and their divorce teams, including mediators, attorneys, and financial analysts, in safeguarding the equity in the marital home.

Being a CDRE means I’m also specially trained to offer real estate guidance and support to the courts when they need expert testimony or documentation to support and educate for the cases at hand.

Call me if you’re going through a divorce or you’re representing someone going through a divorce. I’ll be happy to offer guidance or even take the real estate aspect of the case off your plate.

BAY AREA DIVORCE REALTOR®

SHANNON ROSE/ROSE GROUP
DRE #01422955

KW BAY AREA ESTATE
DRE #01526679

16780 LARK AVE.
LOS GATOS, CA 95032

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