For homeowners looking to upgrade — or downsize — their residences, it’s a difficult chicken-or-egg question: Which comes first, buying a new place to live or selling an old one? Each situation presents a potentially thorny set of issues.
Buy a new home before you sell your current one and you may get stuck with two homes and two mortgages, particularly in today’s dicey real estate market. But sell your current home before falling in love with a new one and a different challenge emerges: Will you have time to find an acceptable place to live before closing day?
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 noncontingent 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.
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.
Stewart Real Estate
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www.StewartRealEstate.com
