Forever homes seem like a thing of the past. As the needs of homeowners change over the course of their life, thus is the need for downsizing, upsizing, or rightsizing. Perhaps your family is growing (or shrinking). Maybe you want to take the equity of your house and move up to more luxurious finishes. Most of the buyers today will leave their home within 5-10 years to find their next house. Some of the more popular reasons for moving include job changes, desire of specific school districts, and lifestyle changes. Additionally there are several search criteria or ‘wishlist’ of the new home that buyers revise along the way. Unless you have several thousand dollars burning a hole in your pocket, most buyers would need to sell their home and use the proceeds of the sale for the down payment of their next home. Fortunately, REALTORS® can originate a Sale of Buyer’s Property Contingency as an addendum to their purchase agreement. With a home sale contingency in place, the transaction is contingent on the sale of the buyer’s home. If the buyer’s home sells by the specified date, the contract/sale continues. But if it doesn’t, the contract may be terminated or re-negotiated with different terms. From the sellers’ perspective, it could be perceived as a WIN-WIN. Its status in the MLS shows that the home is still active with a ‘kick-out’. The house may continue to be shown, offers may be entertained and negotiated. Terms and conditions of other offers are not disclosed for negotiation purposes. If another offer is accepted, the first contract (with the contingency) has the option and an agreed upon timeline to either remove the contingency to sell their home or terminate the contract. An important consideration when presenting (buyer) or considering (seller) this contingency would be what stage the listing process of the buyers’ home sale is. For example, a house that is already under contract, repairs are negotiated, and they are awaiting the appraisal and scheduling closing would be more attractive than if the house isn’t even on the market yet. There is certainly more risk on the buyer’s side. Besides the obvious of a strict timeline of getting your house sold to move forward, so too is the consideration of the buyers for the buyers’ house. Theoretically, at any time in the sales transaction, the seller could accept another offer thus forcing you to make a difficult decision of either removing the contingency or terminating the sales contract. Depending where you are in the process will help guide you but keep in mind ultimately there are factors on the buyer’s (the buyer of YOUR house) side that are out of your control. Any REALTOR® will agree that the home buying process is a complex transaction. There are a lot of dynamics and moving parts at play. That being said, for all of the For Sale by Owners out there, ask yourself how you would entertain, negotiate, and navigate through a sale of buyers’ property contingency.
Until next week, love where you live. And if you don’t contact your local REALTOR®.
Brian Haufe, 2022 MBOR President