Suppose you’re a seller, and someone is interested in buying your house or condo, but he says he needs to sell his own home, first.
Should you accept his offer, contingent upon him selling his own home?
Ugh. You may have no choice, right? Not, if you plan on selling your property, not with the current high level of inventory.
However, there’s always the risk that his home will never sell, right?
How can you protect yourself?
There’s a reason why sellers hate sales contingencies. They have very little control over what happens with the buyers’ homes, right? Maybe their buyer has set an unrealistic price on his or her property. If you take your property off the market, there’s the risk you’ll have to put it back on, three months later, if your buyer pulls out.
[M]any sellers who accept contingent sale offers insist that a release clause is included in the contract. A release, or escape, clause allows the sellers to continue to offer their home for sale until the buyers remove their sale contingency. If they receive another offer before the sale contingency is removed, they can accept it in backup position, subject to the collapse of the primary offer.
The sellers then give the first buyers written notice that they must remove their sale contingency within a time period specified in the contract. This time period is often 72 hours. However, it can be any mutually acceptable time period.
Sellers who accept a contingent sale offer with a release clause assume that their home will continue to be shown to buyers.
If you’re a buyer, you might have to settle for the above, if you want your offer to be accepted. What does this mean? Best case scenario, you’ll be able to sell your current home, and, meantime, no one else will put in an offer on the new home you love. Worst case scenario, your own home is still on the market, and the seller receives a new, attractive offer, and gives you 72 hours to remove your contingency.
If that happens to you, walk away, would be my advice. Your contingency is there for a reason. You do not want to be faced with the prospect of paying two mortgage loans, at the same time.
More: Pitfalls of contingent home-sale offers – By Dyan Hymer, Inman News, by way of The Boston Globe