Finding your dream home can be a time-consuming process, however, it’s entirely possible to find a house that’s perfect for you before you have a chance to sell your current home. If you find yourself in this situation, a home sale contingency may be your best bet.

In its simplest terms, a home sale contingency means that the purchaser of a property must sell and settle their own home in order to purchase the new property…and the buyer is giving them time to do so.

An agreement like this, while complicated, can be practical in today’s housing environment. For one, it provides a sense of comfort to the seller because they know they have a sale in place. When it comes to the buyer, it takes the stress out of having to find a new home once they sell their own. Buyers can then make decisions regarding their sales price and terms, knowing what lies ahead for them in their next house.

The buyer in a contingency will still be going through the motions of the sale and spending money on home inspections, bank fees and appraisal fees that won’t be refunded if the deal falls through because they are unable to sell their own home. It’s a risk that many are willing to take, however.

If your home has been on the market for a while, a contingency makes sense. However, if you’re selling a home in a seller’s market, then it wouldn’t make as much sense to enter into a home sale contingency, especially if you’re in a hurry to sell.

There are also sale and settlement contingencies that allow the seller to continue marketing the house to other potential homebuyers. That means if someone else wants to buy the house, they will give their contingency partner a deadline to come up with the purchase price. If they can’t make it happen, the deposit is returned and the home can be sold to the new buyer.

The downside to an agreement like this is that the home is listed as being under contract with the first right of refusal, which may keep other buyers from coming by to take a look, knowing that even if they fall in love with it and make an offer on the spot, they may not get it.

There’s also something known as a settlement contingency, where the purchaser of your home has already completed the sale of their property and have a set settlement date. If you’re accepting this arrangement, be sure that the buyer’s sale is on track with no inspection issues holding it up.

For more information about home sale contingencies, contact our office today.