Whatever happened to the “Sale of Home” contingency?
Remember the “old days”? You wanted to sell your current home and purchase another. You met with your Realtor® and were advised to get your home on the market first because it will likely take 90+ days to sell. As soon as the sign is in the front yard, you began looking for the next home. You find the perfect home and write an offer which includes a contingency that the closing of your new home is contingent upon the sale and closing of your current home. It is called a “sale of home” contingency and until recently was a common as For Sale signs in May.
Look around. There are far fewer For Sale signs. As demand for homes far exceeds the current supply, the homeowner who does put the sign out is often the recipient of a dozen or more offers. Spread out in front of them like a deck of cards, the offer contingent upon the sale of home is rarely in the running. Why would the homeowner take the risk of your home closing when they don’t have to? In their hands they have 10 offers of preapproved, ready-to-close Buyers. Your offer is tied to an anchor which sinks your chances of being chosen.
You might ask “why would they hesitate to take my offer contingent upon the sale of my home when my home will also sell quickly in this high-demand environment?” It is not the IF of your home going into contract. The homeowner knows your home will likely go into contract quickly. Getting your home into contract is not selling it. The Seller wants to avoid the additional risk of getting your home from contract to closing.
All contracts carry risk, even the best ones.
Receiving an offer on your home is only the “start” block of a multi-step game board. To get to “finish” a buyer has to be preapproved with a good lender and get through a home inspection. The home has to appraise, and the Buyer has to jump through more hoops than twirl at a hula competition. Then, you hope the Buyer doesn’t lose his job, break up with a girlfriend, or mess up their credit by going out to buy a car prior to closing. For a homeowner, these risks exist when choosing one buyer for their home. If they take your contingency of sale on your home, they are doubling the risk of something going wrong. In a “normal” market, the Seller takes this risk because they have no choice. They have one offer. In the current market the Seller doesn’t have to accept this risk and they generally don’t.
I have sold hundreds of homes in this multi-offer market. I can count on one hand the number of sale of home contingencies accepted by a homeowner. Those that were accepted had extenuating circumstances that made the homeowner amenable to added risk.
What are the options of a homeowner has who wants to buy in this market? I’ll tell you in next week’s House Call blog.
This Blog is written by Kathy Chiero, Lead Agent for The Kathy Chiero Group. Thinking of Buying? Get a copy of my free book “Ten Ways to Win in a Challenging Market” Visit us a OurOhioHome.com Ready to sell? Contact us for a no-obligation analysis of the value of your home.
Leave a ReplyWant to join the discussion?
Feel free to contribute!