One of the great challenges in real estate is trying to purchase a new home while selling your current one.
For most homeowners, of course, it’s financially prudent to wait until you sell your home before you buy a new one—because of course, if your current home doesn’t sell as quickly as you’d like, that leaves you in the lurch, possibly paying two mortgages at once. Plus, you may need the sales revenues from the first property to make the down payment on the second.
Then again, doing it this way means you may have to scramble to find and close on a new place once you sell the old one—and that can be stressful.
Contingency offers provide a possible solution to this dilemma—but are they really a good idea? In this post, I’ll briefly weigh some of the pros and cons.
What is a Contingent Offer?
To begin with, let’s define the term. Basically, when you make s contingent offer, you’re making a real offer to buy a home—but with strings attached. You’ll buy the home in question, but only if and when your current one sells. This way, you can lay claim to your new property without being locked into an arrangement you can’t afford. You won’t end up with two houses at once, and you won’t be left to scramble for a house once your old one sells.
That sounds perfect, right? Well, there are a couple of drawbacks to note, both of them pertaining to your theoretical seller.
See it From the Seller’s Perspective
For one thing, sellers do not have to accept your contingency offer. If they believe their home will sell easily, and that other buyers will come along, they may choose to pass by your offer-with-a-catch.
And even if you put a contingency offer in place, the seller may be able to walk away after a certain period of time—meaning you could lose that home you had your eye on. This all depends on the specific language in your contract, of course. It is not uncommon for contingency clauses to give you 30 days or so to secure a loan commitment, or a contract to sell your current house.
There’s also what agents call the 72-hour kick-out clause—which basically says that, if the seller gets another interested buyer, you have three days to kick the contingency part out of your offer, or else lose out altogether.
Do note that, even if you have a contingency offer on a home, the seller is allowed to keep marketing and showing the home—and in fact, it’s wise to do so. What this means is that there is a decent chance you could face competition for the home.
There are things you can do to ease some of the uncertainty that accompanies a contingency offer; as soon as you get a buyer for your own home, and begin to feel confident the deal will go through, you can remove the contingency clause right away. There is some risk here, but your agent will be able to guide you and provide you with the perspective you need to make a wise decision.
Final Thoughts on Contingent Offers
A contingent offer is not a perfect solution to the buying-a-house-while-selling-a-house problem. It is, however, a useful tool to have in your tool box—and definitely something to ask your agent about.
My own take: I want to make the real estate process as smooth and as hassle-free as I can for my clients, and I want to remove any doubts they may have the intricacies of the process. If you’re looking to buy or sell (or both) in North Carolina—especially in Cornelius, Davidson, Huntersville, or Mooresville—I’d ask you to give me a call. Let’s talk about all of this, and hammer out a plan for your real estate journey. Contact my team at Ryan Minges Real Estate today!