Closing the Gap Between Buyers and Sellers
Is contingency buying a good thing?
This is a question I have often be asked, so I figure it is time to answer it here. First off, what is contingency buying. On occasion a buyer may want to purchase a new home but that purchase is dependent on the sale of their present house. So though they have found the home of their dreams, they need to sell their present house and hope they can close on the sale before moving to closing on the new home. With contingency buying, the house stays on the market even though it is under contact and should another buyer come along with no contingencies the seller could sell to the new buyer.
For most folks, I do not think contingency buying is a good thing. If the purchase of a new home is dependent on the sale of your first house, then sell the first house and move into temporary housing until you find your next home. The real estate marketplace is such that houses take longer to sell. So finding your dream home and expecting the seller to wait for your house to sell is risky business. You are risking that your house will sell at your price but often another buyer will like your dream home and if that buyer is contingency-free, then you will have 48 hours to remove the contingency. You are then pressed to sell your house to the first buyer that comes along even if the offer is $10,000 - $20,000 below your asking price or risk having to make mortgage payments on two properties.
Most folks have to much clutter in their house. They have to rent a storage unit to stage their home properly. So moving into temporary housing means putting more stuff into storage until the new house is found. The money spent on temporary housing and storage unit rental costs will leave you in a stronger negotiating position. You can negotiate for the best price for your present house which could mean more money in your pocket even after temporary housing and storage expenses.
Contingency buying is best avoided regardless of whether you are in a rising or down market. That said, getting houses sold and helping with the purchase of new homes, is what I do. Knowledge and experience in today's marketplace is essential in moving houses from "For Sale" to SOLD.
For most folks, I do not think contingency buying is a good thing. If the purchase of a new home is dependent on the sale of your first house, then sell the first house and move into temporary housing until you find your next home. The real estate marketplace is such that houses take longer to sell. So finding your dream home and expecting the seller to wait for your house to sell is risky business. You are risking that your house will sell at your price but often another buyer will like your dream home and if that buyer is contingency-free, then you will have 48 hours to remove the contingency. You are then pressed to sell your house to the first buyer that comes along even if the offer is $10,000 - $20,000 below your asking price or risk having to make mortgage payments on two properties.
Most folks have to much clutter in their house. They have to rent a storage unit to stage their home properly. So moving into temporary housing means putting more stuff into storage until the new house is found. The money spent on temporary housing and storage unit rental costs will leave you in a stronger negotiating position. You can negotiate for the best price for your present house which could mean more money in your pocket even after temporary housing and storage expenses.
Contingency buying is best avoided regardless of whether you are in a rising or down market. That said, getting houses sold and helping with the purchase of new homes, is what I do. Knowledge and experience in today's marketplace is essential in moving houses from "For Sale" to SOLD.
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