What exactly is buying a home with a contingency? & what types of home sales will accept a contingent offer? Is it a good idea or bad? You are not alone when asking these types of questions. Its ‘s important concept to understand in real estate. So let’s dive in together!
Buying a home with a sale contingency means you are purchasing a new home, but you need to sell your existing home in order to complete the deal.The biggest question that most people ask themselves is if t’s better to sell first and find other means of living OR do find your perfect home and hope it doesn’t sell to someone else?
Here are some things we want you to consider for both sides of the transaction!
Consideration for buyers for contingencies:
-Most buyers need to sell their existing home in order to purchase a new one. This typically happens because they are buying a more expensive home (but not always) With that, A home sale contingency gives buyers the time they need to sell and settle before committing to a new home!
-Buyers can avoid owning two homes and holding two mortgages at one time!
-It can be an easier transaction process. A buyer can sell one home and move into the next home since the are already “locked in.” This is nice because you won’t ever be homeless.
Consideration for sellers for contingencies:
-Contingencies can be a bit risky for sellers because there is no guarantee that the buyers home will actually sell.
-If the contract states that the seller is allowed to still market their property and accept offers, the house may be listed “under contract” This makes is look less attractive to other potential buyers.
-Contingencies can be a positive thing for a seller, if the house has been on the market for awhile.
– A seller can include a “kick-out clause” to provide a measure of protection against a home sale contingency. A kick-out clause states that the seller can continue to market the property and accept offers from other buyers. You can then give the seller a certain amount of time to remove the home sale contingency and proceed with the original contract. If the buyer does not remove the contingency, the seller can back out of the contract and sell to the new buyer.
The most important thing to understand:
Home sale contingencies protect buyers who want to sell one home before purchasing another home. Each and every transaction is unique and of it’s own depending on the details of the contract. It’s very important to understand & review ALL terms.
Contact me today if you need any help!