I stumbled across “Contingency Sales Offers Becoming More Acceptable” earlier this month and it got me thinking of possible alternatives. The basic premise behind a Contingent Offer is that you are entering into contract on a new home prior to selling your current residence. Today’s real estate market is ripe for those looking to move up. While all homes have declined in value the opportunity to purchase your dream home in today’s low interest rate environment is something to definitely consider. That brings me back to contingent offers. You certainly want to “strike the best deal possible” on the new home but if you are writing it with a contingency you may not be negotiating from a position of strength. In fact, the seller may take back up offers and when utilizing the California Association of Realtors® “Contingency For Sale Or Purchase of Other Property” Item 6a is the kicker with “Immediate Right to Notify Buyer to Remove Sale of Property Contingency” if a back up offer is accepted. A contingent offer certainly adds another layer of stress and uncertainty for both the buyer and seller.
What is the best way to write the strongest offer possible on a new home having not sold your current residence? Well in today’s mortgage market it can be a challenge. While there is liquidity in the Fannie Mae, Freddie Mac and FHA conforming mortgage markets the Jumbo Home Loan market still has a ways to go. While many high net worth buyers have an excellent cash position it may be difficult to qualify for both the existing home payments as well as the payments on the new home. One program I know of does not count the Principal, Interest, Taxes & Insurance (PITI) on the departing residence listed for sale provided the client has an additional six months of cash reserves to cover the payments. You can now be in the position of writing a non-contingent offer and qualifying for the new mortgage while still in the process of selling your home.While this will not work for all potential buyers it can and will for some who are in a strong asset position. If you would like additional details on if a program like this would work for you I will gladly refer you to a knowledgeable mortgage professional who has access to this financing.
Comments(3)