Business & Merchant

Last Updated on Tuesday, 28 July 2015 20:02

By Roger Dolanch - Broker/Owner

Let's say you are considering a move. You already own a home, but for whatever reason, you have decided that it's time to move on to a new one.

You know what you really want in your next home and you're not willing to settle for anything less. So, you slowly begin to search for your next home. You look casually at first because you are in no hurry and because, after all, you're just looking!

All of a sudden - there it is. You know from experience that if you don't buy it now someone else will buy it out from under you and you'll lose this ideal opportunity. The dilemma: You simply cannot afford to buy the new home without selling your existing house. What do you do?

Your agent says that you can write an offer with a home sale contingency but also says the seller of the home you want probably won't even consider a “contingent” offer if your house isn't even listed for sale yet. Oh, no! You haven't even started to get your existing house prepared to put on the market yet!

As you can imagine, making an offer to buy another home when your existing home is not yet listed for sale or sold can be a tricky maneuver.

The fear of most buyers in this situation is that they don't want to put their existing house on the market for sale unless they have found exactly the right home to buy. After all, they aren't in the situation where they have to sell.

Here are some things to consider if you find yourself in this situation:

You want the negotiating strength of a solid pre-approved for the purchase by a reputable lender for the acquisition of the new home.
You will more than likely have to pay premium price to get the seller to accept the home sale contingency.
You may have to list your property at or slightly below market value to cause it to sell quickly.
The seller may want to see your property listing before accepting your offer to make sure it is priced to sell and to verify that it doesn't appear that your house is not just going to “sit “on the market.
For the benefit of both you and the seller, you want to specify how long the contingent agreement is valid. 60 or 90 days is average, but it can be any amount of time that is acceptable to both parties.
The seller may want the “right to continue marketing” their home to other buyers until you have found an acceptable buyer for your own home.
Unless you negotiate a 48 or 78 hour “wipeout clause,” the property you want can be sold right out from under you. With the wipeout clause, at least the seller has to notify you that they have received another offer. You then have that amount of time to remove your home sale contingency. If you can't, the other buyer gets it.

Depending on your financial situation and credit scores, you may be able to avoid having to use a home sale contingency or even remove it if necessary. Verify your best course of action with a reputable lender. Is a bridge loan right for you? Before you put your existing home on the market, inquire about home equity loan to purchase the new one. Do you qualify for two mortgage payments? Can you borrow from a relative until your existing house sells?

As you can see, with the help of one of our CENTURY 21 Frontier professionals and their financing connections, a little research ahead of time can save your next purchase and help make your dreams come true.