Contingent offers

[Deleted]

Would you accept an offer from someone which was contingent upon the sale of their house?

We had an offer contingent upon inspection and had an issue, which we've now fixed (but the buyers had no more money to increase the sales pirice-we had it priced to move) and once the websites said "contingent" we had no more showings. It pretty much killed our activity.
I'm afraid if we accept another contingent sale we'll never close before we need to close on our new house.

They don't set a closing date for that either do they? They don't even have their house listed yet.

[sjh722]

We have the option for something basically called a "drop dead" contingency where you agree to the terms/sale price, but the property is still marketed as active. If you accept another offer, you send the buyer notice that the contingency is removed and their offer is dead.

If you're in a pinch like you described above (trying to sell before buying another house), I would not accept a contingent on sale offer with a right of refusal window. Especially if their house is not even listed. You do typically set an expiration date, but it's going to be the length of their contingency + 30-45 days to close.

If you can accept the first type, I would absolutely counter back with something like "Purchaser's home to be listed within 72 hours of acceptance of counter with a licensed real estate agent for the duration of the contingency." The last thing you need stacked on top of that is a FSBO or someone who's going to take 2 weeks to clean their garage out before listing.

[IrishBelle]

We accepted an offer that was contingent on the sale of the purchaser's home. It's the norm here. Our buyer's had to give notice to a basement tenant prior to listing but the listing went up shortly after. We closed 60 days after we accepted their offer so it didn't prolong anything for us. In our case, we had multiple offers but this was the strongest and we weren't in a hurry to move so it wasn't an issue for us.

Good luck!

[heygrey]

ideally, no, but i think it depends largely on your local market. here it's very common to have a contingency on the sale of the buyer's house because houses are effing expensive (average $500k) so most people cannot float two mortgages. that said, houses turn over quickly if they are prices well so it's usually not a huge deal.

if you have options to accept a contingency, but throw your contingencies back at them like sjh722 suggested that seems like a good compromise.

[sju]

No but like pp mentioned, it depends on the market. The sellers of our old house immediately refused that contingency in our offer. They had been burned before and years later I can see why they wanted to protect themselves. They were jerks overall but in that one contingency, I see why they did not want it.

Can you increase their earnest money after x day in case they walk? Not sure if that is common but when we sold in a bad market, the one and only offer we got came with just $1k in earnest money. After inspection (which was VERY clean for a 15 yo home) the buyer wanted 8 windows replaced. We had those windows in the disclosure so we did not agree. Our realtor mentioned that in hindsight she wished that during negotiations we would have set a higher $ after inspection (2weeks per normal contract in that city) to discourage the buyer from walking. We closed just fine but things got stressful for a bit.

[vanillacourage]

No, I would not.

If your goal is to sweeten the offer, I would make them an offer where their listing stays active and you have a kick-out clause to your contract, where if they get another offer you have 24 or 48 hours to remove your contingency (ie move forward with the sale despite still having your 1st house) or they are free to accept the new offer. Make sure it's clear that you agree on a purchase price at the initiation of your agreement, that can't be negotiated based upon subsequent offers they may receive.

[Deleted]

Our realtor told us we would only do it with a kick out option-but I'm still not clear how the listing will show online. We need more activity.
IMany of the houses in our area sell within 2 weeks, but we were screwed by the last people so I'm not really interested in another buyer who can't get approved. We live in a true "starter" neighborhood-why can't we get someone who is renting?!!? Ahhhh

[nsl]

I wouldn't accept a contingent offer from someone who wasn't even pre-approved for a mortgage.

[AAM2012]

They don't even have their house listed? Hell no I wouldn't accept that.... Once it's sold if yours is still available then we can talk.

[moolarkey]

Contingents are very common here but they usually include the right of the seller, that if another offer comes in that is better or would close sooner comes in, the person they were originally in contingent contract has a certain amount of time to close or the deal is off. So if I agree to sell to you contingent upon your selling but someone offers me more for my house I can give you x amount of time to pay me the agreed price and that time frame can be 72 hours, a week or whatever you agree on when setting that contingent contract. It is very similar to the "drop dead" that SJH described. The house remain actively on the market but possible buyers are told it is in a contingent contract. This often drives those newer possible buyers to offer more, a closer closing date etc so they can get it.

[sjh722]

Mar 29, 2015 18:32:59 GMT -5 moolarkey said:

Contingents are very common here but they usually include the right of the seller, that if another offer comes in that is better or would close sooner comes in, the person they were originally in contingent contract has a certain amount of time to close or the deal is off. So if I agree to sell to you contingent upon your selling but someone offers me more for my house I can give you x amount of time to pay me the agreed price and that time frame can be 72 hours, a week or whatever you agree on when setting that contingent contract. It is very similar to the "drop dead" that SJH described. The house remain actively on the market but possible buyers are told it is in a contingent contract. This often drives those newer possible buyers to offer more, a closer closing date etc so they can get it.

These are two different things. You're describing a right of first refusal.

Telling/advertising the contingent status is what kills your activity. I live in an area where contingent offers are normally common, but right now houses are going under contract within days/weeks.

[imojoebunny]

Contingent offers are not in favor here, at the moment, but they still happen. Usually there is a time line and a kick out clause where, if the contingency is not met, the seller gets some cash (like we will close in 60 days, contingent on the sale of current house, or the seller will get $5k in earnest money, and can move on to the next deal).

We had an offer contingent on inspection (pretty much the norm here) and we had a back up offer too.

I would not even entertain an offer from someone who was not pre-approved by a mortgage company, though we offered on our current house without pre-approval, and we were really well qualified, just didn't do the paperwork until we found what we wanted.

[evans]

Both the sale of our house and purchase of the new one were contingent on the sale of houses. We would only accept the contingent offer once the buyers for our home were under contract for the sale of theirs. It was like setting up dominoes and any one falling down would have killed all the deals. But it worked out in the end.

This is also really common where I'm from.