A common question we get from our clients is what to do when an offer on their home includes a Sale of Home contingency. In a nutshell, a Sale of Home contingency means that the potential buyer has a home to sell, and that they will only move forward with the purchase of the new home if and when their property sells. Our clients are often uncertain about how to proceed when they receive an offer with this contingency. Of course every situation is unique, but in most cases, we advise the following.
Should You Accept the Home Buyer’s Offer?
Whether or not to accept an offer with a Sale of Home contingency depends on two key factors:
- The salability of the buyer’s property — You (with our help) need to evaluate how likely it is that the buyer’s home will sell within a reasonable timeframe. Factors such as how it is listed on the market (by a Realtor or FSBO, for example), its list price, location, and condition will all play a role in how quickly it sells.
- The dollar amount of the offer — If an offer is going to contain this type of contingency, then the dollar amount needs to be on the high end of what the homeowner is willing to accept. A “low ball” offer with a Sale of Home contingency is usually not worth considering.
If You Decide to Accept the Offer
If our clients consider these factors and choose to accept the offer, we strongly advise them to include language in the counter offer that will allow us to continue marketing and showing their home, even though it is in contract. We also include an escape clause that allows for our clients to accept a better offer. It works like this:
- They accept the offer as a back-up offer.
- They notify the first buyer of the new offer, and give the first buyer a certain amount of time (usually 48 hours) to remove the Sale of Home contingency.
- The first buyer must either remove the contingency (and move forward with the purchase regardless of whether or not their home sells) or be “bumped” by the second buyer.
- If the first buyer does not remove the contingency within the allotted time frame, then the second buyer takes over the primary position and the transaction moves forward.
Sale of Home contingencies are very common and, when handled properly, are just another component of a smooth transaction. We can provide more information about contingencies and what to expect when selling your home. Call us at 614-939-8944.