If you own a home and want to buy a new home but don't yet have your first house sold, you have the option of putting a contingency offer on the home you are trying to buy. This means that the home you are trying to buy can be held while you try to get your current home sold.
Contingency contracts usually only hold the house for a limited amount of time though, and in some cases, you might get bumped if another buyer shows up with a more substantial offer. Meaning no contingency, more cash or better credit. Although this is an option, it should be considered carefully.
If you have great credit or plenty of cash to put down, you can usually make an offer without a contingency. However, if you need to sell your current home in order to have the money to close the deal on the second home, you definitely have a dilemma.
Sellers are often uncomfortable working with contingencies, they want more certainty. To come to a compromise, sellers might accept the contingency contract as long as it has a "kick-out" clause. This clause states that if a better offer is received, the seller has the right to accept the new offer, thus canceling your original offer.
It is a far better solution to sell your first house before you put a contract on a second home. Going this route will end up saving you time, disappointment, and money.
If you are uncertain about your financial situation, meet with a financial adviser or mortgage lender before signing any contracts.
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