FAQ what is a contingent offer? A contingent offer is one in which the buyer is making the offer 'subject to' a certain circumstance such as, selling a home, successfully closing of a home, getting financing lined up, or other contingencies. The best way to explain a contingent offer is with real life stories of home sellers and home buyers.
Example 1: Recently I received a call from an agent whose clients had an interest in listing that was 'coming soon' on the market. His buyers wanted to set up a viewing time before it went on the market. I knew the sellers were not ready for any showings and that they needed at least another week to be 100% 'parade ready' and able to consider any offers. The agent explained to me that the buyers wanted going to sell their home before buying but they were ready to start looking at homes.
Well, are they pre-qualified to buy another home before selling or are they intending on paying cash for their next home? No, he said they must sell their home first. I let him know it was not likely that the seller would be willing to consider an offer from a buyer that must sell their home first. With this type of contingency there is absolutely zero guarantee that the buyer could or even would follow through to successful closing. Making a home contingent upon a 'future' sell of a home is not a contingency most sellers are willing to even consider.
Example 2: This past week we closed on a home for buyers that were moving to Arizona. Our home buyers were ready, willing and able to buy their new home with the contingency of their current home closing escrow successfully. So how does this kind of contingency work? Our home buyers were prepared to show the accepted contract on their current home in escrow as well as the buyers qualification from their lender to the sellers of the home they wanted to buy. The buyers were also through the home inspection period so there were no more contingencies on the sale, other than completing the financing (which is a normal contingency).
All the above documents were submitted along with the offer to purchase, giving the sellers of the new home all the information they needed to make a decision. The sellers accepted the offer after a bit of negotiation and escrow was opened. NOTE: It is critical for all agents involved to keep in communication during this type of contingency to make sure the sale in the other state is moving forward as expected. I liken these type of sales to a 'domino effect'. If one of the sales falls apart they all could fall apart. The good news is that I've done a lot of 'domino sales' over the years and not one as fallen apart because we make sure upfront that all the bases are covered 100% and there will be no surprises.
If you're considering selling or buying a home in the Phoenix Metro Area and are not sure about how to get started, give me a call and we'll discuss your dreams and goals.
FAQ what is a contingent offer?
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