A solution for some buyers and sellers, and one some real estate agents say is gaining increased acceptance in the housing downturn, is making an offer contingent on the sale of a buyer's home. That's especially true as homes languish on the market month after month, notably in the upper bracket.
Specific time frame
Typical real estate contract contingencies give buyers time to have a home inspection performed or obtain financing.
A contingent sale offer gives buyers a set period, often 30 or 60 days, to list their home and enter into a contract. Most contingency agreements contain a kick-out clause: If your dream home's seller receives a non-contingent offer during the set time period, you typically have a day or two to rescind the contingency or risk losing the home.
During the allotted time period, most sellers continue to show their homes, but traffic is typically lighter because the contingent offer must be noted in the multiple listing service, causing some Realtors and potential buyers to bypass the property, said Naperville real estate agent Peg Redding of Keller Williams Infinity.
Contingent offers also have the potential to create a precarious chain. If one person in the chain fails to sell a home or get financing approval, multiple contracts can topple like a house of cards, Redding said.
That makes them unappealing to some sellers, particularly in a healthy real estate market.
Pros and cons
Contingencies limit a buyer's or seller's responsibility to fulfill a contract and close a real estate deal.
"In a strong real estate market, it's harder to get away with (a sell contingency)," said Eric Tyson, co-author of "Home Buying for Dummies." "It adds another element of uncertainty to the deal."
Strong offers include a fair sale price, preapproval from mortgage lenders and no contingencies, said Tyson. But, "a mediocre offer is better than no offer," he said, and for some sellers, particularly of higher-priced homes with fewer potential buyers or homes that have been languishing on the market, a sell contingency might make sense.
"If someone is having a tough time selling, has done all the right things and there's some impetus to move," a sell contingency might be appealing, Tyson said.
A contingent sale offer makes sense in some cases, agreed Mary Bremer, a Keller Williams Realtor who works in the western suburbs. For example, the buyer's home may be more likely to sell than the seller's because it is in a lower price range or a highly desirable location. What's more, some sellers may be willing to entertain such an offer because they wish to limit or take a break from showings, particularly if their home has been on the market for months or if they have no set deadline for moving.krichardson
A solution for some buyers and sellers, and one some real estate agents say is gaining increased acceptance in the housing downturn, is making an offer contingent on the sale of a buyer's home. That's especially true as homes languish on the market month after month, notably in the upper bracket.
Specific time frame
Typical real estate contract contingencies give buyers time to have a home inspection performed or obtain financing.
A contingent sale offer gives buyers a set period, often 30 or 60 days, to list their home and enter into a contract. Most contingency agreements contain a kick-out clause: If your dream home's seller receives a non-contingent offer during the set time period, you typically have a day or two to rescind the contingency or risk losing the home.
During the allotted time period, most sellers continue to show their homes, but traffic is typically lighter because the contingent offer must be noted in the multiple listing service, causing some Realtors and potential buyers to bypass the property, said Naperville real estate agent Peg Redding of Keller Williams Infinity.
Contingent offers also have the potential to create a precarious chain. If one person in the chain fails to sell a home or get financing approval, multiple contracts can topple like a house of cards, Redding said.
That makes them unappealing to some sellers, particularly in a healthy real estate market.
Pros and cons
Contingencies limit a buyer's or seller's responsibility to fulfill a contract and close a real estate deal.
"In a strong real estate market, it's harder to get away with (a sell contingency)," said Eric Tyson, co-author of "Home Buying for Dummies." "It adds another element of uncertainty to the deal."
Strong offers include a fair sale price, preapproval from mortgage lenders and no contingencies, said Tyson. But, "a mediocre offer is better than no offer," he said, and for some sellers, particularly of higher-priced homes with fewer potential buyers or homes that have been languishing on the market, a sell contingency might make sense.
"If someone is having a tough time selling, has done all the right things and there's some impetus to move," a sell contingency might be appealing, Tyson said.
A contingent sale offer makes sense in some cases, agreed Mary Bremer, a Keller Williams Realtor who works in the western suburbs. For example, the buyer's home may be more likely to sell than the seller's because it is in a lower price range or a highly desirable location. What's more, some sellers may be willing to entertain such an offer because they wish to limit or take a break from showings, particularly if their home has been on the market for months or if they have no set deadline for moving.krichardson