Contingent vs. Non-Contingent Offers
Are you Selling your current home and purchasing another? What is the correct way to go about doing that? In the past, our market allowed the ‘contingent’ offer. For those of you that don’t know what that is, a contingent offer is placing an offer on a house with a contingency that you would be able to have your home on the market and have accepted an offer on your current home within a specified number of days. Once that time was up, if your home didn’t sell, you were able to get back out of the home purchase without any damages. But starting in the 2000s, our market was so hot, homes were flying off the market and the contingencies basically left our industry.
Guess what? Our market is good, but it’s not what it was 3 years ago… and the contingencies are making their way back. Sellers don’t like them and they’re not back as much as they were before our market rise, but I’m seeing quite a few of them lately.
What does that mean for you? It means a couple things: If you’re selling your home and purchasing a new one, you MAY have the ability to place a contingent offer. It might not be a very strong offer, but the possibility is there again. But it also means that you might receive offers on your home that are contingent. So be prepared for that. Not that you have to accept the offer, as a seller, but don’t be surprised if it shows up.
What are the other options? Here’s a quick synopsis of alternative ways that may work as well:
Put your home on the market, be looking around at other homes that you may want to purchase, and when you accept an offer on yours, request a 45 day closing time and pull the trigger on one of the places that you’ve already seen since you’ve been looking already. I am in this situation specifically with some of my clients right now. We know their home will be on the market for a little while, so we’d rather not stress out over everything and we’re just casually looking for places as they come up and we’ll be ready to go when that time comes.
Risk: Your new dream home may not be available when the time comes to pull the trigger.
Purchase the new place, assumimg the lender you’re using on the new home will approve you for both homes temporarily. Then put your home on the market and hope it sells quickly.
Risk: Your current home may sit on the market for a little while and you’ll have to make two mortgage payments until the other sells.
I am also working with some clients in this situation and the home is unfortunately not selling as quickly as we’d like. We’re having to do everything possible to get it sold now as two mortgage payments isn’t exactly fun. I also did this on my own personal homes a couple years ago and it took our home a little while to sell, even after we’d moved into the new home. But in hind-sight, it was worth the pain to get the home that we live in now and love.
3. Buy the new home and keep the old home as well, but as a rental. If you can get a renter into your current home, you can qualify up to 75% of the rental income as actual income on the loan of your new home. Then, someone else is paying for your home, you get the tax benefits of writing off your interest every year on the place you don’t live in, AND you get all the benefits of the appreciating value of both homes! This option is not for the faint at heart, but a great option if you’re looking for a good way to invest. Especially in our strong Seattle market.
Risk: Well… you’re now a landlord! And unfortunately your mortgage company on that home doesn’t care if your tenants paid rent that month or not.
These are very real situations in today’s market and there is a different answer for every different person and their comfort levels. If you have questions, call me or email me and I’ll help you figure out the best way for you.
Good luck!
Guess what? Our market is good, but it’s not what it was 3 years ago… and the contingencies are making their way back. Sellers don’t like them and they’re not back as much as they were before our market rise, but I’m seeing quite a few of them lately.
What does that mean for you? It means a couple things: If you’re selling your home and purchasing a new one, you MAY have the ability to place a contingent offer. It might not be a very strong offer, but the possibility is there again. But it also means that you might receive offers on your home that are contingent. So be prepared for that. Not that you have to accept the offer, as a seller, but don’t be surprised if it shows up.
What are the other options? Here’s a quick synopsis of alternative ways that may work as well:
Put your home on the market, be looking around at other homes that you may want to purchase, and when you accept an offer on yours, request a 45 day closing time and pull the trigger on one of the places that you’ve already seen since you’ve been looking already. I am in this situation specifically with some of my clients right now. We know their home will be on the market for a little while, so we’d rather not stress out over everything and we’re just casually looking for places as they come up and we’ll be ready to go when that time comes.
Risk: Your new dream home may not be available when the time comes to pull the trigger.
Purchase the new place, assumimg the lender you’re using on the new home will approve you for both homes temporarily. Then put your home on the market and hope it sells quickly.
Risk: Your current home may sit on the market for a little while and you’ll have to make two mortgage payments until the other sells.
I am also working with some clients in this situation and the home is unfortunately not selling as quickly as we’d like. We’re having to do everything possible to get it sold now as two mortgage payments isn’t exactly fun. I also did this on my own personal homes a couple years ago and it took our home a little while to sell, even after we’d moved into the new home. But in hind-sight, it was worth the pain to get the home that we live in now and love.
3. Buy the new home and keep the old home as well, but as a rental. If you can get a renter into your current home, you can qualify up to 75% of the rental income as actual income on the loan of your new home. Then, someone else is paying for your home, you get the tax benefits of writing off your interest every year on the place you don’t live in, AND you get all the benefits of the appreciating value of both homes! This option is not for the faint at heart, but a great option if you’re looking for a good way to invest. Especially in our strong Seattle market.
Risk: Well… you’re now a landlord! And unfortunately your mortgage company on that home doesn’t care if your tenants paid rent that month or not.
These are very real situations in today’s market and there is a different answer for every different person and their comfort levels. If you have questions, call me or email me and I’ll help you figure out the best way for you.
Good luck!
posted by Soderulnd Homes at
1:32 AM
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