If you are selling you home, do you buy a new home first or do you wait until you sell and risk two moves and being homeless. It can be a dilemma and can be exacerbated by complications of a large family or work schedule, schools, transportation, etc.
Once upon a time, buying a home contingent on the sale of your home was normal. When the housing slump occurred, sellers did not have enough confidence in the market that the buyer could sell their home to risk taking their home off the market. Since 2015, that is beginning to change. Sellers are having more confidence in the market, but not total confidence. Here are some facts for buyers and sellers about contingencies.
. You can not purchase a foreclosure or short sale home contingent upon the sale or close of your home. And banks will not give you months to sell and close on your home.
. A purchase contingent on sale or close is a big seller concession, they need to be compensated with a better offer price to risk losing market time.
. Best time to ask for contingent on sale or close is during the winter months. Sellers are not risking as much. . You have better chance and price negotiation on that – still no foreclosures or short sales.
. Do the inspection up front, but not the appraisal. Yes, the inspection costs money but you need to show the seller good faith that you are serious about the deal. Inspection items are negotiable and need to be done within the 1st week of any contract so no one wastes their time.
. Never take a contingent on sale/close contract over a non contingent contract. Yes, you may get a little money more, but it is not a done deal and wasting precious market time can cost you more than you gain if it doesn’t go through.
. Your house is NOT SOLD. There are no sure things here, there is always a risk. Keep showing it.
. Your agent should do a market analysis of the buyer’s home to ensure their home is saleable or closeable to mitigate the risk.
. Don’t compound contingent on sales. So don’t you get a house contingent on sale/close when your buyer has the same situation. And don’t take a contingent on sale/close deal if the buyer’s buyer has the same. Just like dominos, too much risk, it could all come tumbling down.
. Not all sellers should consider a contingent on sale/close. Contingent on close is better, but if you are in a good market and getting tons of activity…..better not to risk it.
The property ladder can not move without someone taking a risk. Contingencies on sale/close can work, but due diligence is required to calculate the benefits and risks. Many sellers and buyers benefit from this, but both must be realistic.