Guaranteed sales can mean wholesalers taking back unsold goods or realtors buying unsold homes. Secured sales agreements, also known as consignment sales, can involve upfront payment or no payment until the retailer sells the product. It is important to read the terms and conditions carefully to avoid unexpected liability. A guaranteed sale in real estate may have a lower price than market value, creating a disadvantage for sellers.
In the business world, a guaranteed sale can have two different meanings. Retailers and other businesses can enter into a contractual arrangement in which the wholesaler or manufacturer agrees to take back unsold goods at the end of a certain period. This allows them to avoid paying for goods they don’t sell. Realtors may offer another type of guaranteed sale; if a home doesn’t sell within a time stipulated in the contract, the agency or broker is required to buy it. For sellers, this offers the certainty that a home will sell, but it can come with some downsides.
Secured sales agreements are sometimes known as consignment sales. They can work in different ways. One option is for the manufacturer to send products without receiving payment. If the retailer can sell them, funds are sent to the manufacturer, minus a small fee to compensate for displaying and selling the products. This is most commonly seen with artwork or crafts made by artisans who don’t produce high volumes of work.
Alternatively, a secured sales contract may require payment upfront, but the retailer may exchange or return unsold items. In exchanges, a new shipment is sent for the retailer, which can be useful for tasks such as swapping out seasonal products. Refunds allow the retailer to receive compensation for unsold items. These agreements may have other restrictions, depending on the terms, and it is important to read carefully to avoid unexpected liability.
Real estate contracts may offer a guaranteed sale clause. If the home does not sell within the specified time period, after the agent has taken reasonable steps to represent it, value it fairly, and promote it to buyers, the agency or agent must purchase it. The guaranteed retail price is generally less than the list price and may be less than market value. For sellers, this creates a distinct disadvantage.
Some people may not be able to wait for a home sale. They may need the money immediately or they may be trying to sell a house in association with a relocation, where they don’t want to end up with houses in two places. In these situations, a guaranteed sale may be an acceptable compromise. Before entering into a property sale contract, it may be advisable to review all terms and conditions to ensure they are fully understood. An attorney can provide advice, including recommendations for review, to help people make sound legal choices.
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