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Home Sellers, Are You Contemplating a Home Sale Contingency?

By
Real Estate Agent with Long and Foster REALTORS (703) 470-4545 0225085927

Some areas around us are a little slower than usual, so it is not unusual to receive a call from an agent who has a very hopeful buyer who has a home to sell.  

A contingency for settlement, provided all the contingencies have been satisfied, is not unheard of, particularly when the market is not exactly blazing hot.  

An offer with a contingency for settlement, can be a perfect opportunity for a home seller to get under contract when there are no other offers pending, especially when the showings are few and far between, or even practically non existent. 

After all, someone is right in front of you who WANTS your home

So, what is a home seller to do?  

  • First of all, your agent will confirm the contingencies on the house your prospective buyers are selling is, indeed, free of contingencies;
  • Your agent will also talk to the buyers' loan officer, confirming again they are financially well qualified to buy your home, provided they settle on their home first.

What happens, though, if the buyer wants a sale of home contingency?  

Well, that's a little trickier.  Actually, a lot trickier.  In a robust market, home sellers typically do not need to take an offer with a sale of home contingency because odds are good they will get an offer without one.  

If the market is slower,  though, the seller has to consider it may also be slower for the property their prospective buyers are trying to sell, so does it make sense to take the "bird in hand" or wait it out?

In order to make that decision, your agent will evaluate the property the buyers are trying to sell.  Some things an agent looks at includes:

  • How long it has been on the market; 
  • How well it is priced. Yes, we will do a CMA in order to compare it to its competition;
  • How well it shows.   First of all, we'll take a look at the online presence of the listing, reviewing the photos, the marketing, etc.  Then we'll go take a look at the property and see if it is fairly represented online.  Bad photos and lack of marketing do not bode well for acceptance of the offer with a sale of home contingency.  

Of course, the price and other terms of the offer are just as important as always.  And, as a listing agent, I always insist the home inspection and appraisal are done quickly, and not dependent on the buyer's home sale. 

So, while a contingency for sale of home is always groan-worthy when an offer comes in on a listing, sometimes it may well be the right situation for all parties involved.  

 

Bill Reddington
Re/max By The Sea - Destin, FL
Destin Florida Real Estate

Just had one where the buyers had a home to sell. Closed but about 60 days later then the original closing date. Lots of stress.

Oct 26, 2014 04:02 AM
Kat Palmiotti
eXp Commercial, Referral Divison - Kalispell, MT
Helping your Montana dreams take root

I have buyer clients who have a home to sell and they are hesitant to put it on the market before they find a house to purchase.  Sellers of the house they eventually find are definitely going to want proof that the home my clients are selling is priced right and marketed well so it really needs to be on the market prior.  Tricky!

Oct 26, 2014 04:18 AM
Sussie Sutton
David Tracy Real Estate - Houston, TX
David Tracy Real Estate for Buyers & Sellers

I am glad we are okay on the selling of homes. Some believe the buyers are starting to slow down. However the new year is coming up and sales will spring into action one more time.

Oct 26, 2014 05:04 AM
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

I find it interesting that we have so many rules to properly close the transaction there is no way a seller can possibly know of them.

Oct 26, 2014 05:11 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Home sale contingencies are definitely being talked about a lot more frequently in this market.  I suspect we'll start seeing them more frequently.  

Oct 26, 2014 05:25 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

We call them Bumpable Buyers here.  They can be "bumped" out of the deal if another buyer comes along, makes an accepted offer, and they don't perform.  You're correct that in a robust market, changes are slim that any seller will agree -- no matter what they call it!

Oct 26, 2014 07:12 AM
Roger D. Mucci
Shaken...with a Twist 216.633.2092 - Euclid, OH
Lets shake things up at your home today!

Tough call to make.....a contingency could work for or against the buyers, depending on the situation.

Oct 26, 2014 08:36 AM
Suzanne McLaughlin
Sabinske & Associates, Inc. (Albertville, St. Michael) - Saint Michael, MN
Sabinske & Associates, Realtor

Loved your illustration!  And, your explanation was spot on....no matter where in the United States you might be selling or buying!  Perfect, Susan.  Great consumer post!

Oct 26, 2014 08:51 AM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Susan. I am seeing more purchase agreements with Hubbard clauses, as many homes have been sitting on the market.

Great job with your post.

Make it a great week!

Oct 26, 2014 08:19 PM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

I just had one that worked well. Instead of a contingency, we gave a 90 day settlement with a large deposit. The buyers home sold quickly and my seller was delighted. In fact everyone was happy!

 

Oct 27, 2014 12:00 PM
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

Bill Reddington Oh, it's frustrating when you wait and wait...in the end, if it works out, it's great, but it's the not knowing that can be difficult.

Kat Palmiotti  It's such a balancing act...I always ask Sellers if they have a greater fear of being homeless or losing the house they want.  Good luck with your folks!

Sussie Sutton  Most of our area is that way, as well...no one would even think about a contingency, but in some other areas, it does happen. 

 

 

 

Oct 27, 2014 10:59 PM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Susan, this can work out for both parties, but here we would put a first right of refusal on the property.  

Oct 27, 2014 11:09 PM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Susan ... great write and your post has been featured to the group:

EXPRESS WITH WORDS AT ACTIVERAIN

Oct 31, 2014 08:36 AM