Some sellers won’t even consider a contingent-sale offer. If the buyer’s house doesn’t sell, the deal is off and the seller has to find another buyer. To increase your chance of success if you make an offer contingent on the sale of your home, it helps to look at your offer from the seller’s perspective.
Keep in mind that the seller knows nothing about you or the property you need to sell. Common seller concerns are: How salable is your property? Will you price it right for the market? Will you negotiate reasonably to sell your home as quickly as possible?
Try to convince the seller that your home is salable and that you’re a realistic seller. If your home is already on the market, provide the seller with the multiple listing service information for your home, including photos.
Ask your listing agent to prepare a comparative market analysis of your home to show the seller that your home is listed at a marketable price. Supply information about how long it is taking to sell a property like yours. A seller will be more receptive to your contingent sale offer if he or she thinks your home is more salable than his or hers. If your home isn’t yet on the market, sign a listing agreement before you make your offer. This shows that you are serious about moving your home quickly. Authorize your agent to present a copy of the listing agreement to the seller, along with the supporting documentation showing that your home is priced to sell.
It’s a good idea to get your home ready to go on the market before you get into contract to buy a new home. This way, your home can go on the market as soon as your offer is accepted.
A seller may have reservations about accepting your contingent-sale offer if your home has been on the market for a month or more and is still unsold. In this case, you can make your offer more attractive if you commit to lowering your price.
HOUSE HUNTING TIP: Include a release clause in the contract to alleviate the seller’s concern about withdrawing his property from the market for a transaction that may never close. A release clause allows the sellers to continue to offer their home for sale. If the sellers receive an acceptable offer, you are notified that you must remove your contingent-sale contingency within the time frame specified in the contract and provide evidence that you can close even if your property isn’t sold. If you are unable or unwilling to do so, the home goes to the other buyers.
Typically, the release clause timeframe for performance is negotiable, although it’s often 72 hours. You can make your offer more attractive by shortening the timeframe to 48 or even 24 hours. Don’t wait until you are served with a notice to remove your contingent-sale contingency to line up interim financing. If there is serious interest in your home, you may decide to buy the new home even though your home isn’t sold.
Offering more money in consideration for a contingency on the sale of your home will work with some sellers. But, if the market in your area is active, you may find that the only sellers that will entertain contingent-sale offers are those whose properties have been on the market for some time and they might be overpriced for the market.
Buyers who are unable to successfully negotiate a contingent-sale offer should rethink their strategy. It may be an impossible goal.
THE CLOSING: If you’re trying to buy in an area with low inventory and plenty of noncontingent buyers, you may have to sell before buying.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books. Copyright 2007 Dian Hymer Distributed by Inman News.