Can I put this contingency in?

kateydid29August 3, 2013

We built our house in 2000 and still love it but it has more acreage than DH wants to care for and it is farther from my office than I'd like. We found a dream house and really want to buy it. However, if that purchase doesn't go through, then we would want to stay in our existing house.

Our realtor has said our dream house is priced too high. We are willing to pay some over the appraised value because we love it but we would like to put in our offer that the purchase is contingent on the appraisal. If the appraisal is not at least close to the sale price we agree on, we would walk away from the deal. I do not think she will be willing to come down in her price to what I anticipate the appraised value being. I know this type of contingency is pretty common.

Can we also put a contingency in the offer on our existing house that we will proceed with the sale if and only if our purchase of dream house looks like it will actually occur (that is we somehow magically come to terms on the appraisal and inspection issues)? I do not want to lose our existing house if we cannot buy dream house. And I refuse to buy dream house without having an accepted offer on our existing house (we could swing it for a short time but it doesn't seem like good sense to take that risk).

We do have an offer on our existing house that we would be thrilled to accept but have told them that we cannot accept it until we find suitable housing. They've been patiently waiting 5 weeks and are still interested in our house. We plan on talking to our realtor about this type of contingency (on our actually buying dream house) but wanted to know if anyone has ever heard of this being done? I have heard of offers contingent on selling one's existing house but never this way around!

Thanks! Kate

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rrah

Both can be done, but if I were the buyer of your primary residence I would want the appraisal and inspection of the "dream house" to be done prior to me doing my inspection and appraisal. I wouldn't want to be out the money just so I can "maybe" buy your house.

It's a tricky situation that will require careful timing and two sales contracts that reflect that timing.

    Bookmark   August 3, 2013 at 7:42PM
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kateydid29

Thanks, rrah! Yes-we definitely would not want to disadvantage our buyers as they have been so understanding and patient! So we would make a counteroffer where we specify that we accept their purchase offer and that they can proceed with their inspection and appraisal once we have completed ours at dream house and it looks like we will be successful? And probably specify an end date for us to get this done so they are not hanging around forever? This seems like a strange situation to be in!

    Bookmark   August 3, 2013 at 8:15PM
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kirkhall

It is a very strange situation to be in. I wouldn't expect your buyers to wait around forever. If I were a buyer, I'd not want to wait around forever either.

If you do this, you have to have a VERY short close date for your dream house, with a longer close date for your own home...

And, if you weren't on the market long for your current buyer, then perhaps you hope that if they walk (because they couldn't wait any longer), you hope for another buyer.

    Bookmark   August 4, 2013 at 4:25PM
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kateydid29

It is odd, isn't it?!?

Last time we sold a house (1996) it took almost 6 months. We got the offer in on our current house in 5 days! We were so excited since everything seemed to be falling in place so quickly and easily, at least until our offer on our dream home didn't pan out. Arghhh!

So far, our potential buyers are still interested-their realtor emails ours every week asking if we've found a new home yet. I hate inconveniencing them but there is nothing we like as much as dream house OR our current house.

    Bookmark   August 4, 2013 at 4:59PM
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virgilcarter

Why don't you see if the owner of your "dream house" will allow an appraisal? For around $350 appraisal fee, it will tell both the owner and you how the house may be appraised by a lender. Keep in mind that in most states, appraisal is done through a third party drawing from a pool of appraisers, so it is possible that an initial appraisal and the lender's appraisal may not exactly agree.

Good luck on your project.

    Bookmark   August 4, 2013 at 5:44PM
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kateydid29

Virgilcarter- the owner of our dream house finally got an appraisal done after we were so far apart in list price and our offer (after several counteroffers back and forth). She will not share the appraisal results with us. We fear she is not being particularly honest about it. After the appraisal came in, she supposedly told her realtor that she would drop her list price by $40000. A couple days later, she said she would drop it by $45000. Today she said she would drop it by $50000. That is still $10000 over our final highest offer (which we suspect is still over the actual appraised value by about $10000 based on our thorough research and our agent's advice) Yes-we like the house and want it and are willing to pay a little over current market value but not $20000 over!!!

    Bookmark   August 4, 2013 at 6:30PM
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kirkhall

20000 over on how expensive of a house? A 200k house that you plan to live in the rest of your life and is "your dream house" (better than the one you custom built)? That would be 10% more.

A 400K house? That would be only 5% over.

...

    Bookmark   August 4, 2013 at 7:21PM
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kateydid29

Excellent point! DH just said the monthly difference in our mortgage payment would be about $90. In the big picture over 15 years, that's pretty darn small.

    Bookmark   August 4, 2013 at 7:36PM
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weedyacres

Sounds like the seller of your dream house is gradually coming your way. I'd wait it out a bit longer.

Or tell them that without sharing the appraisal with you you're not going to budge on your price.

    Bookmark   August 4, 2013 at 8:55PM
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kirkhall

However, will your mortgage financing require an appraisal? You don't have to see theirs if you will have to have one of your own. Theirs will not be helpful at that point anyway, as the bank will only accept their ordered bank appraisal.

    Bookmark   August 4, 2013 at 9:16PM
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kateydid29

Our lender will require an appraisal of its own. I am afraid the bank appraisal will be lower than the sellers appraisal, which will create an apraisal issue that could scuttle the sale.

We have thought about playing hard ball and waiting for the price to drop even more but dont want to lose the house. Apparently, we want to have our cake and eat it too!

And if we wait too long, we may lose our interested buyer! This is complicated!

    Bookmark   August 4, 2013 at 9:41PM
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kateydid29

Update (for anyone who may be wondering how this turns out!)

Seller of our dream house came down a little more (only $10000 over what we anticipate it will appraise at). Yes it may be goofy to pay over the appraised value but this is an awesome house, a fantastic wooded property with about 3 acres, and an even better location (close to work, restaurants, shopping, our veterinary clinic etc....we will be able to walk or ride our bike to these places!!!). So we have a signed and accepted purchase agreement in hand as of this past Wednesday.

Our potential buyers from 5 weeks ago went through our house again on Friday once they found out we now have an accepted offer on dream house. They made another offer on our house today which we have accepted (same purchase price as last time even!). They agreed in writing that if we don't close on dream house for some reason, the sale of our current home will also fall through.

OMG we will be moving in a month!

Thanks again for all your help and suggestions!

Kate

    Bookmark   August 11, 2013 at 8:52PM
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cmarlin20

I don't think paying $10k over appraisal is goofy, if you love it and want it for the long term, it is nothing compared to living where you want to be. Happy for you...

    Bookmark   August 11, 2013 at 11:05PM
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weedyacres

Yes, we always want to know how things turn out, and appreciate posters that come back and close the loop.

Congrats!

    Bookmark   August 11, 2013 at 11:09PM
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