(Cindy's Blog about Portland Oregon Real Estate & Stuff)
What to know when making an offer contingent on selling your home
Oh, there it is, that perfect house. You pull up and nab a flyer just knowing that it has to be out of your price range....you take a double take and see that it is actually well within your price range. You call your REALTOR® and after looking at the inside you realize this home is the one you want.
Only thing is...you have to sell your home first. In fact, you haven't even put your home on the market yet.
The optimal thing of course when you are actively looking for homes when you have a home to sell is to sell your home first. Yeah, I know, why put the cart before the horse right? I so understand how this can be risky...I mean..what if your home sells and you haven't found a new home..will you have to rent..move your stuff twice? Maybe. Unless you are in a rare position where you can buy the one home without needing the proceeds of your current home, you'll need to make an offer contingent on you selling your home.
We are currently in what you call a "buyer's market". That is in most areas, the home inventory is over 6 months. Homes are taking longer to sell on average. Many sellers that have not had any offers might just be open to accepting this contingency if all the other areas of the offer are strong. On the flip side, you now have to SELL your home in this same market.
Here are some things you'll need to think about when you make an offer contingent on your home selling.
1. The seller can and should still be actively trying to sell this property. They won't have it go pending just because they accepted your offer. In Portland, the listing will show on the RMLS (Regional Multiple Listing Service) as "Bumpable" which is exactly as it sounds..you can get bumped out if a non-contingent offer comes along. They probably will have open houses to get in a buyer that doesn't have a contingency.
2. Be prepared to sign a 24, 48, or 72 hour contingency Agreement. If your agent hasn't had you fill this out when submitting the offer, you can expect that the listing agent will advise the seller to have one signed by you BEFORE they accept your offer. If the seller gets a non-contingent offer, say you checked off 24 hours..they will give you 24 hours to waive your contingency and move along with the purchase, or terminate the contract. If you say you'll move along with the purchase, be prepared to show proof of funds on how you'll do this.
3. When putting your own home on the market, you will need to have it in very good condition and priced agressively to sell. Your home needs to be a little BELOW the other homes directly competing with your home. I'm not saying way below, but it needs to be more enticing. You know that the listing agent on the seller side will be running comparables on your home BEFORE the seller accepts your offer. The seller might even have a price point in the counter offer. Think about it from their stand point...when they move their home for showing Active to Bumpable, this does take away some buyers. If your home is sitting overpriced, then it says you're really not serious about buying that property.
4. Some people might want to use a different REALTOR® for the list and buy sides. This is NOT the time to be doing this. It's in your best interest to have one agent who knows all the timelines for both the purchase and sale and can coordinate both to your best advantage. If you have two agents, it can be hard if they are not on the same page.
Purchasing a property with a Contingency Agreement is done often. If you need someone to help you write up a contingent offer, please feel free to contact me.