Contingency Clause

harlanOctober 12, 2011

Been a while since I have bought a house and know that things change so need help with this one. I am interested in a home, but need to sell mine first. I am thinking of making an offer based on selling mine first. Is this the best and only way to go? Any tips? Thanks!

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The seller may want a 'kick out' clause that allows them to give you 48 or 72 hours to waive the contingency if they find another buyer or the contract is void.

As a seller it is hard to even get a house shown by agents that already has a contract.

    Bookmark   October 12, 2011 at 10:13AM
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Why not wait until yours is under contract before you start looking? When homes were selling quickly, there was less risk to sellers to accept an offer with a contingency, but nowadays they'll likely be much more reluctant, because your home could take a long time to sell.

    Bookmark   October 12, 2011 at 12:53PM
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There is no way I would accept a contingency. Even if their house was already under contract, I still would not accept a contingency. Too many things can go wrong. Once buyers realize a house is "under contract", they ignore that house and look at others.

Back when houses were selling quick, appraisals came in ok and banks were lending money, it was perfectly fine to accept a contingency - not anymore. I know there isn't a lot of people out there who can buy a house without selling theirs first, and I know I am reducing the number of potential buyers - but thats just the way it is.

    Bookmark   October 12, 2011 at 1:20PM
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This is really location specific right now. How long is the average days on the market where you live? It makes a huge difference if houses are selling in 30 days vs 6 months. Many sellers would be willing to wait a bit, but not many would find a 6 month delay acceptable.

If you are in an average market, you'll probably be better off trying to sell your current home before making an offer on a new one.

    Bookmark   October 12, 2011 at 4:25PM
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Only go house shopping for a new house if your home is SOLD (with the money in the bank, not just a contract) or else you can afford two notes and everything else that goes with it. Very few sellers want to deal with a contingency, and it puts your offer in a weak position.

    Bookmark   October 12, 2011 at 6:12PM
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I go shopping when my house is under contract and then I include a contingency in my offer that says, "contingent upon the successful closing of buyer's home." The real estate agent gives them all the details--my buyer is pre-approved, a copy of my contract, etc., to show them I'm strong and it's likely to go to closing. HOWEVER, three times it did not go to closing because the buyers couldn't get mortgages for various reasons! So it's a big risk nowadays. One my buyers asked me to accept the same contingency--he was under contract with a strong buyer. I had to take it. And it fell through. But I'd do it again. Not many people are able to sell their home and actually close on it, and then go live somewhere else while they house hunt. I would NOT take a contingency if the person's house was not already under contract.

    Bookmark   October 12, 2011 at 10:48PM
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In our market, Charlotte, NC, I advise my sellers to not take a contingent contract, unless the buyer is 30 days out from closing or less. If more than 30 days out, seller can give prospective buyer a Right Of First Refusal.

    Bookmark   October 13, 2011 at 7:52AM
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That's good advice NC. They should be closer to closing.

    Bookmark   October 13, 2011 at 4:18PM
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