The word “contingent” can seem daunting, especially when it comes to a decision as big as selling your home and buying another. But, it can save you from going into major financial stress when moving from one home to the next.
Here’s how to buy a house contingent on selling yours!
What does a contingent home sale mean? How does it work?
Buying a house contingent on selling yours means that you buy the house only in the case that your current home sells. Your agent will add a contingency clause to the terms of the home offer. They protect buyers from carrying two mortgages.
There are three main scenarios with a home sale contingency:
- Your home is on the market and you’re looking for your next home.
- Your home is on the market and you’ve found your next home.
- Your home isn’t on the market but you’ve found your next dream home.
Let’s explore each of these.
Your home is on the market and you’re looking for your next home
The good (and bad) news is that it’s a seller’s market. This means you’re in a good position to sell your home but you’re also in a tough position to buy another one.
The coronavirus pandemic only worsened the low home inventory and the strong demand for housing. In fact, purchasing demand went up 20% between 2019 and 2020. The market is flooded with buyers, which means sellers hold all of the power.
As a buyer, you’re going to have to work hard to find your next property and put in an attractive offer. This may seem like a daunting task, but if you happen to find your next house first, read on to the next scenario.
Your home is on the market and you’ve found your next home
In this scenario, you have two big tasks: focusing on selling your home and preparing a great offer for a new home.
Here are some ways to help focus on selling your home:
- Enlist the help of an agent. The agent will be able to help you look at comparable home sales in the area over the last few months in order to price your current home for the market.
- Make repairs or updates on things that can cause buyer hesitation. The biggest things to take care of are structural issues, anything not up to code, and the existence of any substances like mold or asbestos.
- Prepare to make a quick move. Pack up any personal effects & transfer those boxes to a storage facility (or out of the way in a basement or attic).
Now, you can focus on the offer on your new house. Here are some ways to make your offer appealing:
- Offer a higher price than your competitor.
- Agree with the seller’s terms on a closing date.
- Make it personal with a handwritten note about what makes the property ideal for you & your family.
Your home isn’t on the market but you’ve found your next dream home
The first thing to do in this scenario is getting your home on the market. According to the Realtors Confidence Index, the median days a home is on the market in August 2021 is just 17 days. That’s a very short period of time, and it can be daunting when you still have a selling process to go through with your current property.
You run a high risk that a contingent offer could expire or they’d find another buyer. And, a seller might not accept a contingent offer from a buyer who hasn’t listed their own home yet.
Find a REALTOR® before you start the process
Enlist the help of a real estate agent to guide you through the process and make sure that you are in the best position possible.
Team Melton has over 50 combined years of real estate experience to assist you through every step of the process. Contact us today to get started on selling your home!