People live indoors. Its hard to say that without sounding sarcastic, but I am sincere.
It should not come as a surprise to a seller or their listing agent that their purchaser is selling their own home, especially if they are in a higher than average priced property. I shouldn’t have to explain, for example, that the purchaser of a $2 million property (and I count 678 listings in Westchester along active, pending or closed in the last year between $1.75M and $3M) isn’t living with their parents or on a month to month lease of a small apartment. They probably live in a home they own that is less than $2 million (or in the case of the super affluent, downsizing from a $4 million home).
It’s therefore very common for a home buyer to also be selling a home they still own in order to buy their next residence. Sellers shouldn’t be alarmed by this. It’s perfectly understandable for the purchase to be contingent on the sale of the buyer’s home. But the devil is in the details.
There are two distinctions that need to be understood:
- Contingent on closing. These buyers have buyer for their home already. If the home isn’t under contract yet it at least has a meeting of the minds with a ready, willing and able buyer. But a signed contract is preferable.
- Contingent on the sale. They don’t have a buyer yet. This is not preferable, even in a hot market.
With a closing contingency, there is no uncertainty about the salability or likelihood of closing on the buyers’ property. There’s a buyer. We have a reasonable expectation of success.
With a sale contingency, there is uncertainty. It could take months to find a buyer. It might be overpriced. The buyers might not be truly motivated and have an unrealistic price on their home.
A closing contingency is normal and no big deal.
A sale contingency is not optimal and in many cases downright risky. I would never advise a seller to accept an offer like this unless I had significant assurances that the house the buyers are looking to sell is going to sell. Those assurances could mean that I am, I manage, or I know the listing agent on the contingent home.
Please do bear in mind that this is coming from a broker’s perspective, and that you should consult with your attorney on contractual matters and verbiage, always.
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Sale Contingency vs Closing Contingency
It should not come as a surprise to a seller or their listing agent that their purchaser is selling their own home, especially if they are in a higher than average priced property. I shouldn’t have to explain, for example, that the purchaser of a $2 million property (and I count 678 listings in Westchester along active, pending or closed in the last year between $1.75M and $3M) isn’t living with their parents or on a month to month lease of a small apartment. They probably live in a home they own that is less than $2 million (or in the case of the super affluent, downsizing from a $4 million home).
It’s therefore very common for a home buyer to also be selling a home they still own in order to buy their next residence. Sellers shouldn’t be alarmed by this. It’s perfectly understandable for the purchase to be contingent on the sale of the buyer’s home. But the devil is in the details.
There are two distinctions that need to be understood:
With a closing contingency, there is no uncertainty about the salability or likelihood of closing on the buyers’ property. There’s a buyer. We have a reasonable expectation of success.
With a sale contingency, there is uncertainty. It could take months to find a buyer. It might be overpriced. The buyers might not be truly motivated and have an unrealistic price on their home.
A closing contingency is normal and no big deal.
A sale contingency is not optimal and in many cases downright risky. I would never advise a seller to accept an offer like this unless I had significant assurances that the house the buyers are looking to sell is going to sell. Those assurances could mean that I am, I manage, or I know the listing agent on the contingent home.
Please do bear in mind that this is coming from a broker’s perspective, and that you should consult with your attorney on contractual matters and verbiage, always.