“We have a new pair of twins and need a bigger home. We’re very picky and won’t list our current home until we find one to buy. We need the money from that to buy, so we’ll have to make a contingent offer and then sell our place. Do you think this is a good approach?”
Answer:
No, and here’s why…
Banks virtually never accept contingent offers on their foreclosures.
And traditional homesellers don’t like them much either. If they’ll even consider one, they’ll want a premium price and a “72-hour clause”. That says they keep trying to sell their home and if they get another offer, you’ll have 72 hours to remove your contingency of selling your home. And if you can’t, your offer is cancelled and you lose the home (but you do get your deposit back).
And that’s only the half of it…
Being under the gun with that contingency, you’ll want a fast sale, which usually leads to a discounted price.
So let’s go through this: you overpay for your new home and undersell your old home. Sound good to you?
If not, here’s a better idea, step-by-step:
1. “Scout” to see if you like the homes for sale in your price range. The goal isn’t to find THE home; it’s just to get a good feeling if there are homes out there close to what you’d consider. If so, then…
2. List your home for sale (with a skilled agent!) contingent on you buying another home. The contingency means if you don’t buy a home, you don’t have to sell, so you won’t be out on the street with no home.
3. Watch the market you want to buy in while your home is for sale.
4. Accept an offer on your home contingent on you buying another.
5. Find a home and offer contingent only on your home CLOSING. Since it’s already in escrow, more sellers will seriously consider your offer and less will want a premium price.
6. Close both and move!
This plan takes most of the pressure off and can save you thousands of dollars.
If you’re willing to rent short term, another option is to list NOT contingent, but state that you want a 30-day rent back. Then once you have a buyer, find a home and make an offer contingent on closing your home sale. If you don’t find a home quickly enough, you’ll have the 30 day rent back. And if that’s not enough, you’d have to move and rent until you can find and close on a home.
Feel free to call me and we can sit down and go into greater detail…
For more on how to avoid the pitfalls of buying while selling, try our free DVD, How To Sell Your San Diego Home & Buy Another.
