Ask Phyllis is a blog series of frequently asked real estate questions. Have a question about real estate? Email us here
Dear Phyllis,
While interest rates remain low, we hope to buy a larger home. We have made a couple offers but keep getting turned down because the other buyers we are competing with don’t have a sale contingency. I know it’s difficult to secure a home because they are selling so quickly. If we sell ours, what happens if we don’t find another home? What do you think is the best approach?
Thank you,
Paul
Dear Paul,
We are experiencing a red hot seller’s market. There are a couple of different approaches you could take:
1) If your home is not yet on the market, it should be ready to go, photographs, property brochures, etc. Your Realtor® needs to convince the seller and their real estate agent that your home will be immediately listed. Note, you will not be negotiating from a position of strength; likely the seller will only consider your offer if the offered price is strong or the property has been on the market for some time with only low offers.
2) I have had clients successfully sell their home using a “rent back”; you sell your home with a 60 day escrow and the right to rent the property (if needed) from the buyer for an agreed upon period of time. This may give you ample time to find and close on another home. When reviewing offers for my seller clients, I prefer to see an offer from a buyer who is currently in escrow on the sale of their present home (as long as their buyer has removed contingencies). This indicates a highly motivated buyer.
3) Likely the safest solution is to list your home for sale subject to you finding a home of choice (the buyer agrees that escrow will close only IF you find a home of your choosing). While this may be ideal for you it will not be for the buyer. Escrow will be opened and the buyer will be expected to pay for an inspection and appraisal. If you don’t find a home the buyer is out both the time and money. Again you are not negotiating from a position of strength. As there is a shortage of inventory, you likely won’t have trouble finding a buyer to take this chance.
Buying a home with a sale contingency is a complex issue and a conversation best had with a Realtor® in person or at least over the phone.
Related Post: Competing in a sellers market
