A lot of buyers in today’s market need to sell their home first before they can buy another. As a seller, should you accept that contingent offer?
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What if a buyer makes an offer on your house and they still have a house to sell?
I often get a call from an agent who says, “Great news! I took my clients by your listing and they love the house. They want to put a contract in.”
When I ask when they will send in the contract, the other shoe drops. The agent says, “Well, they have a house that they have to sell first before they can buy your client’s house. Would your seller consider accepting a contract that’s contingent on the sale of the buyer’s home?”
If you’re the seller in this situation, it’s a good idea to have a conversation with your agent to see what your best course of action is.
First of all, what are the risks involved with a contingent offer? If you are in a market where your house should sell at or below the average days on market, do you want to take your house off the market for this offer? You may lose the opportunity to find a better buyer over the next two weeks, and you may even miss out on a multiple offer situation.
In most cases, accepting the offer is simply not worth the risk.
So, is there ever a time when it makes sense to accept a contingent offer? Shouldn’t you just ask the buyer to come back once their home is under contract?
There are a few instances where you may want to accept a contingent offer. For example, let’s say you have a very unique property, like a farm. You need the right type of person to jump in and run that farm. If that buyer has a house to sell, we’ll research the home. If we believe that their home will sell, it may make sense to pull your farm off the market and accept that contingent contract.
Another example would be if you expect your home to take longer than the average time on the market to sell. You have more leverage with the contingent buyer. You can accept their offer but only on the terms that work best for you.
Of course, it’s also important to consider the buyer’s perspective. In today’s market, a lot of buyers have to sell their homes in order to move up and buy something else. In that case, what can you do?
If you have to be a contingent buyer, make sure that you get your house on the market and have a good idea of what homes are available for you to purchase. Then, once your home is under contract, you can make on offer that is contingent on your house making it to closing, which is a bit stronger than the typical contingent offer.
Whether you are buying or selling a home, if you have any questions about contingent offers, just give us a call or send us an email. We would be happy to help you!