Selling Your Home or Buying a New One… Contingent
Posted January 25, 2021 in Real Estate Trends
“I have a house to sell. I want to buy a new one. What do I do?”
When you sell your home, and need to buy another home, it’s called being contingent. Your offer to purchase the new home is contingent on the sale of your old home. It is common that our home needs change as our families grow or downsize. So, how does one do this? There are a couple of different options for a seller to sell their home and purchase a new one.
1. If you want to get an offer accepted on another home before you put your home on the market, you can make offers “contingent on the sale of your home.”
Typically, the contingent period is 45 days, but that can be shortened or lengthened. If the seller accepts your offer, it is contingent on you receiving and signing an acceptable offer on the sale of your current home. At this time, the home you are buying goes into BMP status, meaning it is bumpable. A bumpable position means the seller can still market and show their home during the contingency period.
What happens if the seller receives a non-contingent offer during the Bumpable/Contingent period?
If the seller receives another offer that is NOT contingent, they might give you notice of a non-contingent offer and give you a few days to remove your current home contingency, if you are able to do so. It’s kind of a ‘put up or shut up’ notice.
As the buyer of the new home, you have two options. The first is to remove your contingency and move forward with the purchase of the new home. The second is to let the seller know that you have not received an offer on your current home and you can’t move forward with the purchase. At this time, the seller has the ability to accept the new offer, and you continue looking for a new home.
However, if you receive and accept an offer on your current home during the contingency period, your Realtor will send over the contingency removal form to your seller. The home you want to buy goes into Pending position, and the Bumpable/Contingency is satisfied. Once a home is in Pending status with an acceptable & signed offer, it is ‘off’
2. The second option is to put your home on the market first. While your home is being shown to potential buyers, you can be out looking with your Realtor for your next ‘perfect’ home. The biggest concern with this option is, “What happens if I can’t find the right home?” When you go this route, we normally make the sale (of your current home) contingent on you, the seller, finding a new home to purchase.
Your buyer might give you an extending closing until you find a new home to buy, or extra time to close on your new
home. I have a seller in this position right now.
3. The third option is to sell your home without the contingency of finding a new home. If you do not find a new home and your home sells, you might stay with a family member, or in an RV, etc. while you continue to search for a new home. This means you are not contingent. However, this option does not work for everyone, as not everyone has this ability, or desire.
Many builders will not accept a contingency and won’t start building a new home until your old home is sold. Some builders, however, will not insist on you selling your old home before they begin building your new home. Your Realtor can help you talk with builders about your options.
4. Another option is to purchase/close on your new home, then sell your old home vacant. This is a good option if you have children, pets, non-traditional work hours, etc. There are some advantages to this option, but the downside is that you must be approved to carry both loans, and during this period you would have two mortgages. This is a great option, but not the best option for everyone.
The two most common options are #1 and #2. So, what will work best for you? Find a new home and get your offer accepted contingent on you putting your home on the market? Or, will you put your house on the market first and, if needed, ask for an extended closing if we can’t find you a new home right away?
As your realtor, we can help you figure out what works best for your family. We are here to advise, guide and assist. In the end, all final decisions are yours because this is your home adventure. You’re driving the bus, we’re the GPS.
Tracie DeMars 360-903-3504