Do I Buy or Sell First ? Reverse Contingency

By
Real Estate Broker/Owner with HomeRome Realty 410-530-2400 311291
http://activerain.com/droplet/4rQG

Do I Buy First? Do I Sell First? How about a reverse contingency

 

When inquires come in on my properties, I like to find out the buyer's motivation.  Do you have a home to sell in order to purchase?  The answer is sometimes, "we just want to look for awhile".

 What happens if you fall in love with that home or condo. Can you move forward without the proceeds of your current home?

In response to the age old question "Do I buy or Sell First"Do I Buy or Sell  HomeRome realty

It is not unusual to have a client want to see every home or condo available right now..in spite they have not even considered putting their home on the market. The look of fear and panic can be seen.

What if I sell and have no place to move!? I cannot disrupt my family, I am too old or not well enough or a myriad of other reasons why two moves are not possible.

 

 I have yet another suggestion, one that  I call a "reverse contingency". When two separate moves are just not possible. My advice  is to list the property, contingent on "finding a home of choice". You may see HOC in remarks.

 

 

                                                                                                                FIRST

It is easy to find out how serious they are to avoid that 2nd move.  Ask, " What if someone comes along and offers you a million dollars?" ( their home is in the $500,000 category.)  Quite a few sellers will say OK, we will pack up, go into storage, travel for awhile, move to an apartment, move in with parents or  to a hotel for that kind of incentive.

Others will not or cannot be inconvenienced for any amount of money. This is the perfect place for the "reverse contingency."  When an offer is made a specific clause is in the contract stating  a contingency for a short amount of time (could be weeks) for the seller to find that home of their choice...notice that wording. "home of choice". 

Once the home is listed, viewing available properties is appropriate so the seller/buyer can become familiar with the availble inventory. I have several homes on the market with  a HOC contingency.

When the current home goes under contract, the buyer can write a contingency offer on the new home contingent on settlement of the present  home. Did you follow that?  There are so many ways to help buyers and sellers. First you must ask the right questions and find out the buyers and the seller's needs.

 

close

Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Lenn Harley 09/09/2010 03:13 AM
  2. Karen Kruschka 09/10/2010 03:01 AM
Topic:
Real Estate Sales and Marketing
Location:
Maryland Baltimore City
Groups:
"Whacked"!!!
Tags:
homerome
hoc
reverse contingency

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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

Margaret - I think it can work well as a strategy for some folks who really are commited. We don't see this often in the MLS although I suppose it might show up in the negotiations. It will certainly help clarify those who want to sell and those who want to buy. I have had a couple of buyers who did not want the risk of such a contingency in this market.

Jeff

Sep 09, 2010 07:31 PM #28
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Karen Kruschka
RE/MAX Executives - Woodbridge, VA
- "My Experience Isn't Expensive - It's PRICELESS"

Margaret  In reading the comments I was surprised to see how agents in so many areas do not consider it viable in a weak market.  Of course, the decision should be "property specific"  If my property is a multiple offer generator a weak market it is of no concern

Sep 10, 2010 02:56 AM #29
Rainer
332,782
Irene Kennedy Realtor® in Northwestern NJ
Weichert - Lopatcong, NJ

Were you a fly on the wall when I had this conversation with a potential seller a couple days ago, Margaret? 

Sep 10, 2010 03:02 AM #30
Rainer
47,412
Peggy Noel
RE/MAX Commonwealth - Chesterfield, VA
Bouchard, ABR, CDPE, SFR

Thanks for putting out a great ip.  Additionally, I think it also lets us see if the seller is really ready to let go of their current home.  Very often they fell it's time to move, but hate to let go of their home nonetheless.  This is a great litmus test question - thanks!

Sep 10, 2010 03:15 AM #31
Rainer
478,183
Not a real person
San Diego, CA

This was one of those posts where reading the comments was just as interesting as reading the post itself.

Sep 10, 2010 04:53 AM #32
Rainer
174,571
Betsy Schuman Dodek
Washington Fine Properties - Washington DC Area Real Estate - Potomac, MD
SearchPotomacHomes.com

What a great post. I am showing a Seller a home this afternoon and her house is NOT under contract. She has not found one house she likes but my guess is that if she had the right motivation on the buy end that she might be more apt to negotiate on the sell end!

Sep 10, 2010 05:29 AM #33
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Celeste "SALLY" Cheeseman
Century 21 Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

It works....our inventory is low.....

Sep 10, 2010 05:39 AM #34
Rainer
68,335
Russell Benson
Berkshire-Hathaway HomeServices/Anderson Properties - Moore, OK

I am actually going to use your advice on a listing I am getting ready to sign up that has the same issue you talked about.  Thanks so much for the great advice.

Sep 10, 2010 05:44 AM #35
Rainer
176,158
Julia Odom
Select Realty Professionals - Chattanooga, TN
Chattanooga Homes for Sale

I had this conversation with a seller recently as well. He wants to move but has some very specific requirements for the new place that could be tricky...

Sep 10, 2010 06:04 AM #36
Rainer
31,693
Allen Shipman
Shipman Partners - Austin, TX

I'd like to know how buyers and buyer's agents react to this "Reverse Contingency"?  I can't imagine that many of them are happy with it.  In most corners of the world it is a Buyers Market, which means that buyers have choices and may have an advantage when it comes to contract negotiations.  This seems like a tool that would work better in a Sellers market, but if it is working for you then congrats.

Sep 10, 2010 06:53 AM #37
Rainer
7,272
Allison Simson
Summit Real Estate - Dillon, CO

In my second home/resort market of Keystone, CO, we run into this problem a lot.  Thanks for the interesting twist! 

Sep 10, 2010 07:29 AM #38
Rainmaker
588,855
Neal Bloom
eXp Realty - Weston, FL
Realtor CRS-Weston FL Real Estate

Margaret,

I guess it all depends...if you need to sell first then I always say put in the contingency in the contract for purchase so this way if it doesn't close you have an out. If someone comes to a listing I have with a contingency to sell their home first...well then I request to see a contract and or the listing so I know its on the market..I also go back generations in case there could be 5 other parties involved.

Sep 10, 2010 07:56 AM #39
Rainmaker
372,956
Gina Chirico
Lattimer Realty - Fairfield, NJ
Real Estate Agent - Essex County, New Jersey

I haven't done that but I have seen listings like that.  My only concern would be that just as a seller is reluctant to accept an offer from a buyer with a home to sell, a buyer may be just as reluctant.  What if the seller didn't find a house of their choice?  I've come across some pretty picky sellers.  Not saying they shouldn't be picky with one of their biggest investments but maybe I'll rephrase it to say nit picky sellers.  In a perfect world, a seller can buy and sell and everything moves smoothly.  I've done it personally and have had quite a few transactions where my sellers bought and sold and everything worked out.  I think buyers may be leary because the entire transaction could fall apart if the seller doesn't find a home of their choice even after buyers met all of their contingencies.

Sep 10, 2010 11:06 AM #40
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Bryan Robertson
Intero Real Estate - Los Altos, CA
Broker, Author, Speaker

In Silicon Valley the contingent sale is unpopular.  It is a definite part of the landscape but I've found that bueyrs don't want to enter into contract to buy a home where the seller needs to find a place to live (even if they don't have to sell something themselves).

Moreover, most sellers have a hard time finding someone who will give them the time to move.  Fortunately, I've always been able to work out the the buyers or sellers a compromise by drawing out the escrow a couple of weeks to give my clients time.  However, it doesn't go over too well.

Sep 10, 2010 11:40 AM #41
Rainmaker
452,814
Diane M. Phillips Realtor 443-286-4365
Frankly Real Estate Inc. - Manchester, MD
Specializing in Carroll Co., MD

Margaret, I've had that conversation.

Sep 10, 2010 12:48 PM #42
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Margaret Rome, Baltimore Maryland
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

 

Diane, Good for you for having the conversation.

Bryan, It doesn't need to be popular to work for a specific client.

Gina, This can only be used when you know your clients needs.

Neal, You have all your bases covered.

Allison, Thanks for sharing that.

Peggy, So glad you liked the questions.

Irene, Yep, that fly was me!

Karen, Glad you liked this enough to do a reblog. Thank you.

 

 

Julia, You have to know the specific requirements.

Russell, Can't wait to hear how it works out for you. Keep us posted.

Betsy, You have to find that hot button.

Allen, It is not my job to make the buyer's agent happy. It is my job to do the right thing for my client. I appreciate your comment.

Russel, Many times the comments take on a life of their own.

Julia, Sounds like the right time to make this suggestion.

 Jeff,It will certainly help clarify those who want to sell and those who want to buy

 

 

 

 

Sep 10, 2010 04:18 PM #43
Rainer
273,525
Coral Gundlach
Compass - Arlington, VA
Real Lives. Not Just Real Estate.

 

I think sellers that have to be "talked into" listing who feel they need a HOC contingency or refuse to entertain the moving twice/temp housing scenario need to seriously look at how badly they want to move.  There are countess ambivalent potential sellers out there who will only sell when the dream home jumps in their lap.  Not sure if they should list.

Sep 11, 2010 03:42 AM #44
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Margaret Rome, Baltimore Maryland
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Carol, We are not doing our clients justice by "talking them into anything". This is a suggestion for a specific needs. Please read my comment #17

There are many people who a double move is not possible. There are people who NEED to move. Think of the elderly, ill, handicapped, recent widow/er and a myriad of others. This is not for an ambivalent seller. There are times that the inconvenience far outweighs  the financial stress of a move.

Sep 11, 2010 05:56 AM #45
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Margaret Rome, Baltimore Maryland
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

Hi Margaret

It's pretty rare to see this in our seller's market but occasionally we do. More commonly we are seeing rent'backs offered by buyers to give sellers more time to vacate. Sometimes it's rent-free!

Jeff

Apr 30, 2018 10:22 PM #47
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