making an offer on a home contingent upon selling yours

Has anyone ever done this? How does it work?
We found the home of our dreams. However, we have to sell our home first. We don't want to lose out on this house we love.
Wondering if anyone has had success with this.
TIA

Re: making an offer on a home contingent upon selling yours

If the sellers get a non-contingent or cash offer, they are likely going to bypass yours.

I totally understand not wanting to lose your dream house, but what happens if your house doesn't sell right away? Can you carry two mortgages?

Re: making an offer on a home contingent upon selling yours

We're in the process of it now. And my SIL just closed on her house doing the same thing.

You really need to already be listed and on the market in order to make this work, but yes, you would make an offer contingent on the sale of your home and then you need to hustle to sell yours immediately. Which means you need to be willing to sell low to get out quickly if need be.

It all depends on the seller if they are willing to accept an offer with a contingency. Some realtors will advise their clients not to accept, others will not. We just put an offer in today and the sellers told their realtor that for the right price they are willing to accept an offer with a contingency to sell. We're listed on the market and our sale price is very competitive because we know we need to sell quickly.

I will tell you though that if your home is not yet listed on the MLS, its very unlikely that a seller will take your offer seriously. You AT LEAST need to be on the market, if not already having a potential buyer for your place.

Message edited 3/17/2015 2:53:49 PM.

Re: making an offer on a home contingent upon selling yours

Re: making an offer on a home contingent upon selling yours

Re: making an offer on a home contingent upon selling yours

Re: making an offer on a home contingent upon selling yours

Re: making an offer on a home contingent upon selling yours

We were on the market 3 years ago. The seller declined our offer based on the clause it was contingent of us selling our house.

Re: making an offer on a home contingent upon selling yours

As a seller I would not accept any offer that has a selling contingency. The Long Island market is just too hot and too much of a sellers market to need to do this.

I would need to have an overpriced POS in a lousy neighborhood and location to accept a seller's contingency.

Re: making an offer on a home contingent upon selling yours

The old owners of our house were not entertaining any of those type of offers. They sold to us bc we had the $$, but the downside for us is we had to carry 2 mortgages/ utilities until our first place sold.

Re: making an offer on a home contingent upon selling yours

I think it'd be tough to get your offer accepted if there's any other offer on the table in the same range as yours.

What you might consider doing is selling your house first and renting while you look for another house. That's if you can't get the house that you love now on the market.

Re: making an offer on a home contingent upon selling yours

It's quite difficult to line up a sale with your next purchase. The market, as others have said, has grown very competitive for buyers on most areas of LI. So the challenge is two-fold: (i) sellers don't want to and don't have to accept an offer that's contingent on another sale, as many homes get a lot of interest, multiple offers, and (ii) inventory is low, so it's a lot of added pressure on a seller to try to find their next house in a hurry (especially if they expect that their current home will sell quickly). If you try to negotiate an extended closing date on your sale, you may lose buyers (and your ability to get top dollar) because lots of buyers try to close quickly to avoid issues with rates going up (or they just don't want to wait an extra long time beyond a standard closing timeframe).

I always advise potential sellers of this challenge upfront. I have done transactions where I've had a seller client line up a purchase, but you really need the circumstances to align. In one case, my clients were selling a condo to a first-time homebuyer who lived at home, and was willing to wait awhile to close. On the purchase end, the seller of the home they were buying was willing to take the offer because they were already in contract on their condo and far along, and his house had been on the market awhile. I have another situation right now where my seller clients are buying a senior housing co-op with the cash proceeds of their sale... so in that case (downsizing), it is more common and acceptable to have to close on a sale first to complete a purchase.

In certain areas that are more high-end (e.g., Dix Hills) it is common for buyers to already own a home and be "trading up." But I don't know of any attorney that will allow a "contingency" in the contract. It's more the standard mortgage contingency that will cover you (assuming you can't get a mortgage on the new house without selling your first one). If you can carry two mortgages, then you have to be prepared to do that and run the risk.

Most of my seller clients who plan to purchase a new house right away wind up doing a short-term rental or staying with family. It just makes it more manageable and helps maximize the result of each transaction by keeping them separate: You don't have to jump at the first offer on your current house or be afraid to negotiate, and you don't have to settle on your next house or rush into anything. It's just a simpler negotiation all around.

It is hard to get a seller to accept an offer that's contingent on a pending home sale, but it's impossible if you don't at least have the home on the market... in most cases, a seller will only consider it if you are under contract, and sometimes they want to know that your buyer of your current home has a mortgage commitment. A seller's worst fear is that a buyer won't get a mortgage, so now you are adding an additional layer of uncertainty where the seller has to worry not just about the buyer, but the buyer's buyer. If I had a seller client with a hard to sell home, I would consider allowing them to proceed with a buyer who had a home to sell ONLY if that buyer had a buyer in place and I could vet everyone's financial qualifications. A hypothetical sale with a hypothetical buyer wouldn't fly for me.

I really think that anyone looking to sell and then buy ought to educate themselves on the market where they want to purchase and casually look, but not get their heart set on any house until they are further along with the sale. Sell first, then buy, that's how it has to happen. Inconvenient and often stressful, yes, but that's the reality.

Re: making an offer on a home contingent upon selling yours

making an offer on a home contingent upon selling yours

I asked for a contingency clause when we had an accepted offer. Sellers refused and backed out. Found the same style house and did the same thing. Sellers agreed and we bought that house. Our house was not on the market either time. It sold pretty quickly (as we knew it would) and the first house we put an offer on had not yet sold when we closed on the house we bought and when it did sell, it sold for 15,000 less than our offer. We were also able to line up closings- we sold our house and paid "rent" to the buyers. We closed on our house the day after and were paid "rent" by the sellers of our new house until they vacated- only a few days later. Everything was smooth!