Understanding Home Sale Contingencies

 Posted on April 06, 2016 in Real Estate

The process of selling your home can be long and difficult, so when a prospective buyer makes an offer, it is often very exciting. Many buyers, however, are not in a position to make a purchase without selling their current home. But what happens if the buyer sells his or her home without knowing that the purchase of your property is a guarantee? Such a situation can be very tenuous for an individual or family, leaving them in a state of limbo and without anywhere to go after the closing on their home. To address this possibility, home buyers are increasingly making offers that include home sale contingencies.

Growing Acceptance

While real estate professionals suggest that home sale contingencies are not preferred, they are often necessary. In some cases, a buyer may have trouble securing a mortgage to buy a new home while still paying on his or her current residence. In others, he or she may not be able to afford to maintain two homes at the same time. As you try to sell your home, you would, of course, probably prefer to have a solid offer rather than one with contingencies, but if all of the other elements are right, and you do not have a line of prospective buyers vying for your attention, a home sale contingency may be worth your time.

Limited Window

Home sale contingencies do not give your prospective buyer unlimited time to sell his or her current home. Depending on the nature of the offer, you may agree to hold off on marketing your home to other potential buyers for a set period of time, or your agreement may allow you to continue your efforts. You and the prospective buyer must decide upon a date by which the buyer's home must be sold, including closing. If he or she cannot sell the home in that timeframe, the contract to buy your home can be terminated.

If you home sale contingency permits you to continue entertaining other offers, the initial buyer will usually be given priority over new prospects. In practice, this means that if you have accepted a buyer's contingency offer and a second buyer makes an offer, the contingent buyer has a set period of time—usually one or two days—to decide to remove the contingency and proceed with the purchase. If he or she cannot or will not remove the contingency, you may accept the second offer and return the first would-be buyer's deposit.

Complicated Considerations

You must consider a wide variety of factors when deciding whether to accept offers that include home sale contingencies, and we are equipped to help. Contact an experienced Joliet real estate attorney at the Law Offices of Tedone and Morton, P.C., today to get the professional guidance and responsible representation you deserve. Call 815-666-1285 to get the answers you need to your most pressing residential real estate questions.

Sources:

http://www.realtor.com/advice/buy/contingency-agreement/

http://www.investopedia.com/articles/personal-finance/111513/home-sale-contingencies-what-buyers-and-sellers-need-know.asp