Here’s the problem, you want to sell your home, but you can’t because you don’t have any place to live in the meantime. And you’ve been told that most homeowners won’t accept an offer that’s contingent on you selling your home.
This creates a vicious feedback loop.
So what should you do? Here are just a few of the ways to get out of this negative feedback loop:
Learn the market you are trying to purchase in.
Some markets are hot, some are red hot. Recently, I had a client moving from a Seattle neighborhood to an outlying suburb townhome. While the market in Seattle today is receiving 10% over the list price (on average), the townhome market the buyer was looking in was receiving only list price and it is taking longer to sell those townhomes. Because of these differences in markets, a contingent offer may actually be very feasible.
Put yourself in the Sellers seat when making an offer.
Most home-owners are in the exact same boat as the buyer. Meaning they have to go buy a home, too. When you make a contingent offer, you’re asking the seller to put their dreams on hold while you test the market. Contingent offers are made and presented as if this isn’t a factor, that’s the problem with contingent offers.
“Your ability to insert these types of clauses into a contract will depend on whether the home in question is located in an area where there’s a buyer’s market or a seller’s market. Not all home buyers and home sellers will agree to such clauses, but it never hurts to ask.” ~Real-Estate.Lawyers.com
Have your broker talk to the listing broker.
Determine the cost to hold the home during the contingent period and perhaps offer to make their mortgage payment for that period. If they are pursuing a home purchase you might want to consider buying them an extended interest rate lock. The key to making a contingent offer is to recognize your gain in the flexibility of these terms isn’t without cost to the seller. If you can offset the costs you might have a fighting chance.
Appeal to the listing broker when making this pitch.
Remember the listing broker has an interest in a fast closing, as well. When you make a contingent offer, you are asking a listing broker to present an offer that may be adverse to their own interests. While it could be argued that the broker should do what’s best for the homeowner regardless of the broker’s interests, it’s hard to deny a quick sale is best for the homeowner. To overcome the negatives in the terms of a contingent offer, think about all parties involved and brainstorm ways you and your broker can appeal to all of the parties involved.
Think about the drawbacks a contingent offer can mean for you.
When you make a contingent offer there are also many pitfalls for the buyer. Depending on the terms of your individual offer, you may be bumped by a non-contingent buyer any time before your home sells. If this happens, it could put you in a very uncomfortable position. You may have to invest money in inspections for a home that ultimately may not close due to your offer getting bumped or your home not selling.
You need a professional, experienced broker guiding you on this. There are many ways to navigate this market, some better than others. Know your options before you commit yourself to a binding contract that may not be in your best interest.
Check back later this week, we will talk about ways to make a contingent offer non-contingent.
Still looking for more? Mel, from Yankton, South Dakota, asked, “If we made a contingent offer, can we still lose the house?” Click here to see what Realtor’s around America had to say!