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How to Buy a House Contingent On Selling Yours First
Amber Ramsey | LearnItForLife
March 3rd, 2023
In real estate, a contingency is a condition that must be met in order for a sale to move forward. If a contingency set in a purchase offer isn’t met, the buyer can walk away without losing money.
A home sale contingency states that a sale only goes through if the buyer sells their current home first. Home sale contingencies protect buyers who can’t afford to carry two mortgages at once. But for sellers, contingent sale offers are risky because there’s no guarantee a buyer’s home will sell. In today’s competitive market, it’s increasingly difficult to get a contingent sale offer accepted. While most sellers are comfortable navigating common contingencies for inspection, appraisal, and financing, home sale contingencies are becoming rare.
That doesn’t mean buying a home contingent on selling yours is off the table. However, it’s important to make your offer attractive to offset the risks of a home sale contingency. From Bonita Springs-Estero Realtors, these are the success strategies that will get your contingent offer accepted.
4 success strategies for a contingent offer
List Your House Before Making an Offer on your Dream Home.
Sellers are more likely to accept a settlement contingency than a sale and settlement contingency. A settlement contingency is used when a buyer’s home is under contract but they want protection if the sale falls through for any reason. A sale and settlement contingency, on the other hand, relies on the buyer getting their home under contract and settling the sale successfully.
Prepare Your House for a Quick Sale
For both types of home sale contingencies, a quick sale is a must. Buyers should repair anything that might cause buyers to hesitate or a sale to fall through including major inspection issues, cosmetic problems, and curb appeal. The home should be staged, personal effects packed up, and as much relocated to storage as possible. Also be sure the space is kept clean. Use natural alternative cleanersa to deal with any last minute messes. This way, you won’t have to worry about bad odors lingering in the space. Scheduling movers last minute can be tricky, so vet movers well in advance and compile a short list to call. Consult an online directory of rated and reviewed movers so you can find necessary details like licensing and insurance all in one place. Find tools that can help make the transaction quick. You can use a tool like this one, for example, to electronically sign documents. This will save you and the buyer from unnecessary cross-town trips to sign in person.
More Than the Asking Price
Buyers who want sellers to look past contingencies need to craft a strong offer elsewhere. That includes the price. Offering above the asking price increases the odds of getting a contingent offer accepted, especially in competitive markets
Include a Kick-out Clause
Kick-out clauses are most common in sale and settlement contingencies. This provision lets sellers continue showing
Alternatives to a Contingent Offer
Even the strongest contingent offer is at a disadvantage in a seller’s market. However, there may be
another way to buy and sell a house at the same time.
- Request an extended closing to allow more time to sell the current home.
- Use a bridge loan or HELOC to finance a new home before selling.
- Sign a rent-back agreement to stay in the current house while buying a new home
- Buy first and rent out the first home until ready to sell.
- Sell first and move to a temporary rental while buying a home.
The local real estate market is the biggest factor in the success of a contingent sale offer. Sellers are more likely to accept contingent offers in a buyer’s market compared to a seller’s market where multiple buyers are competing for the same property. The smartest thing buyers can do is to consult with a local real estate agent who can serve as a trusted resource for information about the housing market and buying and selling process.