Contingent Sales

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Every once in awhile a client comes to me with a plan to buy another house, yet they need to sell their existing home in order to accomplish that. They want to make an offer contingent upon the sale of that home. In their mind it is the safest alternative because they’re frightened of the idea that, if they sell their home first, they’ll get stuck during an escrow period or a rent back and be forced into a purchase that they really don’t want. They also, in all honesty, feel more in control if they can buy the dream home and then sell their existing home…possibly closing the two concurrently.

While this idea certainly sounds appealing, it’s been my experience that it almost never works out the way people imagine it will. First of all, I’ve probably looked at hundreds of offers while representing sellers over the years and I’ve never seen one of my clients ratify with a contingency offer like this. Why would a seller, particularly in this market, take their place off the market and wait for somebody else to sell their place…a place they know nothing about. The only reason I can think of is if the buyer with the contingent offer does everything the seller wants regarding price and terms. Even then it’s rare! A buyer with a contingent offer loses almost all of their leverage to negotiate…and then they have to aggressively price their original property in order for it to move quickly. Let’s see here 1) pay too much for the new place and 2) sell for too little for the old place…what an idea!

Here’s a really big lesson that I’ve learned in the last 20 years…there is no such thing as the perfect house. If you lose a house that you really, really love…there will be another one coming along that you like just as much. I promise. Sell your existing home first. Price it reasonably, sell it and then go shopping for the new home. There are exceptions of course, like if you have enough cash to buy first without selling, but contingency offers are very problematic. If you sell your original home and have a 30-45 day escrow you can negotiate a rent back of, say, 30-45 days. During that time I know you’ll be able to find a home you really like. I’ve been a part of it dozens of times.

Comments

  1. Michelle says:

    Jim, you promise that in 30-45 days, we will find something we like? It feels dimmer and dimmer everyday.

  2. Jim Minkey says:

    Once you have an escrow on your place…you get motivated. Most of my clients find the next house in the following two weeks! They usually cancel the rent back, or cut it back!

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