Need to Sell Your Property to Buy
a New One?
A Contingency for Sale of Buyers’ Property
is All You Need!
Some buyers need to sell their existing home to be able to purchase a new one, especially when "trading up" to a more expensive house. The reason is quite simple: avoiding owning two homes and holding two mortgages at one time while waiting for their own home to sell.
The contingency for sale of the buyers’ current property (COP), allows buyers to submit an offer for a home on the condition they sell their house first. In other words, with a home sale contingency in place, the transaction is contingent on the sale of the buyer’s home. If the buyer’s house sells by the specified date, the contract moves forward. But if it doesn’t, the contract is terminated.
Some would say that this contingency may limit the sellers home buying options as some sellers might feel uncomfortable to enter into a contract with people who need to sell their old home first, even if the COP contract allows them to continue to market their property.
I completed several of these transactions which are easier than it sounds when you have a competent real estate agent to help you go through this process. Based on my experience, to be successful in these kinds of dealings, you need to be pro-active and use the following methodology:
1/ Make sure your home is already ready to go on the market before you start looking at other properties;
2/ List your property for sale no later than the day before you will write an offer on the property you want to purchase;
3/ Do not remove the contingency for sale of the buyers’ property when the buyers of your home will remove their contingencies. The contingency for sale of the buyers’ property shall be removed the day before the close of escrow on the new property.
4/ Also, bear in mind that this is the realtor’s role to document and demonstrate to the sellers and their agent why and how your property will sell quickly.
To do so, I usually rely on a set of facts such as but not limited to: showing that the house is listed at a price that will allow a quick sale, making sure that the inspections pertaining to your current property have already been done before to list the property. This way, the buyers of your home will be fully informed of the physical condition of the property before they write an offer. As a result, they will be less likely to perform their own inspections and more likely to remove the condition of the property contingency at the time they will write their offer.
I will also remind sellers that you are virtually a cash buyer or a buyer with a huge deposit as the proceeds of your sale will be wired directly from your title company to the sellers ‘title company. Therefore, and on the contrary of buyers who would acquire the home with a loan, there will be no loan and appraisal contingency neither there will be a condition of the property contingency if the sellers of the new house already completed the inspections for their home. In other words, the sellers will have to wait a few more weeks to sell their home but in exchange they will get from you a cash or almost cash offer with no contingencies.
Lastly, the home sale contingency might be a good thing for sellers which property has been on the market for a while. An offer with a COP is still a contract which will give the sellers another chance to sell their property to ready, able and willing buyers.
Hope this helps. If you are in need a proactive and experienced agent to help you navigate this type of transactions simply contact me.
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