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Sellers
don't like offers that are contingent upon the sale of the
buyers' home. Buyers don't like to make offers on homes
that are contingent upon the sellers finding a replacement
home. The reason these contingencies aren't popular is
that they involve a high degree of uncertainty.
An
offer that's contingent on the sale of another property
isn't worth much unless the buyer's home sells. If it
doesn't sell, the deal is off. Likewise with a sale that's
contingent upon the seller finding a replacement home. If
the seller doesn't find a suitable replacement, the sale
is off.
In
an ideal world, sellers would find their new home before
they put their current home on the market. This way, they
could sell without a requiring a contingency that might
jeopardize their marketing effort. Some buyers,
particularly buyers who need to be in a home by a certain
date, won't even consider offering on a home that's
contingent on the sellers finding a home.
Some
sellers, however, don't have the financial wherewithal to
buy the replacement home without having their current home
sold. They need the proceeds from the current home in
order to close on the new home.
One
alternative would be to put your home on the market with a
provision that you may need a long close of escrow or rent
back. A rent back provision lets you stay in your home and
rent from the new buyers for a time after closing. The
length of time is negotiable between the buyers and
sellers. This gives you time to find a replacement home so
that you can avoid an interim move.
HOME
SELLER TIP: Sellers who are intent on selling contingent
on finding a replacement home should attempt to reduce the
uncertainty factor before they market their home. Start
looking for a new home before your current home goes on
the market.
Once
you're convinced that you'll be able to find a home to
buy, put your home on the market. Price it competitively
so that buyers will be willing to accept your contingency.
If you've located a specific home you want to buy, have
your agent indicate this in the Multiple Listing
information about your home.
Buyers
may be concerned that the sellers will be unreasonable in
their home search. If the sellers have already found a
home to buy, this increases the chances that the sale will
go through.
If
you're making an offer on a home that's listed contingent
on the seller finding a home, and the sellers haven't
located a replacement home, consider including a release
clause in the contract.
A
release clause might read like this: If the sellers
haven't located a replacement home by a certain date (i.e.
2 weeks or a month), the buyers can give the sellers
written notice that they are withdrawing from the contract
unless the sellers remove their home purchase contingency
within a certain time period (i.e. 24 to 72 hours).
With
a release clause (also called an "escape" or
"kick out" clause), the buyers aren't tied into
a contract for an extended period of time. They can get
out of the contract if the sellers don't find a home
within a reasonable time period.
If you do find another home to buy and deliver a
release clause to the seller, make sure the sellers have
agreed to cancel your contract, and return your deposit,
before you enter into contract to buy another home.
Otherwise, you could find yourself buying two homes
instead of one. |
