Several prospects I have spoken to find them selves in a quandary. They want to find the right home for themselves and get in contract before they sell their current home and move.
In this unstable market I am unaware of anyone willing to accept an offer of purchase with a contingency of the sale of a home in the offer. Some new home sellers might work with this if the completion date for the new home is down the line a ways.
If you have the resources you can buy the new home and then sell your current home. Most people do not have the financial resources to do this, and if they can afford it have two house payments at one time is very costly.
However, there is a 3rd option. That is to sell your home with a contingency of the sale being complete only when you find and close on your new home. In this market you might find buyers will to wait for you to find the home you want after they are in contract with you. There are some risk and many issues should be decided when you are finalizing the contract:
- You should clarify in the contract the type of home you will be seeking. Be as specific as possible in regard to style, size, location etc. Remember if you have too many specifications it may scare the buyer.
- Clarify in the contract how long you have to find and close on your house.
- The contract should address what happens if you cannot locate the home you want or if either party wants out of the agreement. The deposit should tie the buyer to you for a bit, but at the same time buyers will be reluctant to be tied down too long.
- Remember if the market changes too much one or both parties may see advantage in getting out of the contract. Damages will generally be limited to the amount of the deposit.
- The lending market is also very volatile at the moment and it may be hard for a buyer to hang on to their pre-qualification status and they may have to start over on the loan if the situation drags out too long.
For all the pitfalls I believe this is a viable option for someone wanting to buy and sell at the same time. If you want more information on how to do this or selling your home please contact me directly. We can provide you with market information where you need to sell and where you want to buy.