Some potential homebuyers are sellers themselves. In a market where it often takes longer to sell a home and where it is harder to get the asking price, these buyers have a dilemma.
Typically, homeowners that sell one home to buy another want to secure their replacement home first. The market makes it hard. Few people want to be straddled with two mortgages. Unfortunately new mortgage lender requirements make it even more difficult. In the past homeowners could purchase a new home before selling the old one by claiming rental income for the home that was being sold if it didn't sell. Now, most mortgage lenders will not consider rental income for unsold properties.
The homebuyer can offer to purchase a new home contingent on the sale of their old one by having a clause to this effect put in the contract. Most sellers will accept the contingency offer as long as the purchase agreement includes a release clause. The release clause allows the seller to continue to offer the property for sale. If another offer is received, it can be accepted in a back-up position. All new offers are subject to the collapse of the primary offer.
If another buyer comes along, the seller can then notify the primary buyer that they must remove the contingency offer within a certain time frame and provide proof of their financial resources to purchase the home. If this is not done, then the primary offer must be withdrawn and the property would go to the back-up buyers. With sellers anxious to move on, they may be reluctant to accept the contingency clause, but the release clause protects them.
Unfortunately, some buyers will not have success with the contingency offer, either because the seller refuses to consider it or another buyer comes on the scene before they can carry through with their plans to purchase. If this happens then the buyers may have to consider waiting to sell their current home first before they commit to buy. A provision could be added to the contract to allow the sellers to rent their current home for a specified period of time after closing. If this option is not available, then the seller could temporarily move to a rental until they locate their new home.
In real estate, like with most everything in life, timing is everything. Working with a good realtor is essential to helping you coordinate the timing of buying and selling your new home. Move with Marla! The Marla Schneider Team will help you market your North Shore home and find a new one.
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