Many buyers want to purchase a new home, but they have an existing home to sell first. They are apprehensive about selling their home until they know they have a place to move to. They often want to make their new purchase contingent on the sale of their existing home. This is not a good idea when we are in a seller’s market, like we are now when the housing inventory is so low.
Many sellers are receiving multiple offers and if one of the offers is contingent on the sale of the buyer’s home, it will quickly be thrown out as the seller has no assurance of when or if there will be an actual closing.
If a seller does accept an offer contingent on the sale of the buyer’s home, the listing status is changed from “Active” to “Active Contingent on the Sale of Another Property”. This means that the seller still has the right to continue to market the property to attract other buyers. There is an immediate notification to other buyers out there that someone wants this house but can’t buy it without selling their home. If another offer comes in for the property, the new buyer can bump the contingent buyer. The contingent buyer will be given notice that the seller wants to remove the contingency, within 2 business days, or whatever time period was previously negotiated. The buyer must provide a true and valid purchase agreement on the buyer’s existing home, with no contingencies other than financing, to remove the contingency and move forward with the purchase.
From a seller’s perspective, if the contingent offer is the only offer on the table, then they would most likely accept the offer as it can generate interest from other buyers, and it can keep the contingent buyer motivated to get their home sold quickly to remove the contingency before they get bumped.
I advise my clients that know they want to move, to get their home sold before they write an offer on another property so they are in a position to purchase without the contingency. As soon as there is an accepted offer accepted on their existing home, we start looking for their new home and try to time the closings for their sale and purchase on the same day. Their offer may be contingent on the successful closing for their existing home, as they need the proceeds for their down payment, but it is no longer contingent on the sale of their home.
An experienced Real Estate Agent can help guide you with the best negotiation advice for your unique situation.
Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to firstname.lastname@example.org. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.