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Often times homebuyers are selling and buying at the same time when they need to upgrade or downsize their home. Often, these people are A) using equity from their current home to use towards down payment and closing costs or B) their debt-to-income ratio does not support carrying two mortgages. These situations are often the norm, so do not let it stop you. It is very important if this profile fits your wants and needs that you work with a full time agent to create a game plan that is tailored and unique to your particular situation.
Contingent to sale offers are written when a person has a home to sell before they can technically perform to purchase another home. It means "I am making an offer to purchase your home as long as..(or when) my home sells". In order to have a competitive advantage when writing a contingent to sale offer, it is important that you have your home prepared to hit the market within (recommended, not required) 24 hours of writing the offer, or have your home on the market already, as this is a common requirement that is counteroffered by sellers to accept your offer. The reason why, is because by accepting a contingent to sale offer will not only take longer to close the transaction, but there will be several unknown factors that could arise as well. Unknown factors can range from the home you are selling may not satisfy inspection, appraisal, or your buyers loan could fall through. Sellers will also often ask for a First Right of Refusal, meaning that they will accept your offer contingent to sale, but will keep marketing the home. If they receive another offer that does not have a sale contingency, they may invoke the First Right of Refusal and give you an agreed upon time period to remove your sale contingency. Removing the sale contingency may happen if you get your home under contract during that time period, qualify for a bridge loan, or if you have the debt to income ratio that will support carrying both mortgages until your original home is sold. Feeling overwhelmed? This is exactly why its so important that you hire an agent to help you craft and execute your game plan. If you are holding off listing your home until your dream comes on the market (watch my video that covers this here), then we still want to have your professional real estate photography done, your custom crafted listing description ready, your pricing strategy and comparable market analysis completed and your documents ready to go, so when you are ready to make your move... you can.
Contingent to Buy offers can be accepted on your home you are selling as well. You can list your home and accept an offer, but implement a contingency to your homes buyer that states we will begin moving forward with the process once you have found the home you want to purchase and have an accepted offer. Keep in mind that although this is currently a sellers market, this is not as competitive and attractive to buyers . Much like a contingent to sale offer is not as competitive and attractive to sellers. But the GOOD news is every single real estate transaction has two parties that have different wants and needs. Sometimes a seller is not necessarily looking for a fast closing so they have time to complete building of a new home, so they have time to find a new home to buy or whatever their circumstance may be. Sometimes a buyer is not in a rush to close either because this is their dream home and they may have flexible alternative living arrangements, such as a lease that they would prefer not to break, the option to stay with family, friends, or maybe a short term rental. This is the beauty of negotiations is making the transaction make sense for both the buyer and the seller. This is part of the importance of having an agent that can represent you and get as close to getting you your ideal situation as possible. You will never know the conditions that will satisfy both the buyer and sellers situations, unless you try. I always tell my clients, the worst that can happen is they say no, they counteroffer or they say yes.
Another option when you have a contingent to sale offer, is having your home pre-inspected before listing it, to gain a competitive advantage. Having your home pre-inspected will cost you a couple hundred dollars, however, you will have the opportunity to correct issues you were not aware of that would come up in your home buyers inspection that could cost you THOUSANDS in negotations, or price your home accordingly. Depending on which of those game plans works best for your needs, it is always better as a seller to have the choice. You could even use it as a competitive advantage in writing your contingent to sale offer (a seller would likely find it attractive that they have less likelihood of losing the deal due to inspection issues), and you can also use it as a competitive advantage when marketing your home to buyers. The only "downside" is that you may discover more items you need to disclose on your sellers disclosure for your home, however, we should all be operating with integrity anyway, and increasing your home buyers confidence with trust is always a wonderful thing.
Ready to sort out your situation and tailor a game plan? Call me, text me (989)859-2326, or send me a message on Facebook. I would happy to help you accomplish your goals!
Watch my video about our current inventory shortage and creating a game plan here!
Teresa
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