By Mike Bodeen · 20 February 2017
But are they the Best for Your Negotiations?
I wrote a contract this weekend for clients who will be putting their home on the market shortly. They, like most of us, don’t want to have to move twice, so they elected to find the home they want to buy, then buy it “contingent” on the successful sale of their home.
How does this actually play out with sellers?
Like everything else in real estate (and life) it depends on the individual situation. I’ll tell you how I look at it when representing a seller. First off, it’s just not the strongest negotiation position to be in. Here is the order of strength when it comes to making an offer:
1) Cash
2) Conventional loan (with at least 20% down)
3) Government loans such as VA and FHA
4) Contingent on selling home (already have buyer)
5) Contingent on selling a home (needing a buyer)
Normally speaking, #5 (contingency needing a buyer) will be trumped by every other buyer type. Why? Because a seller wants certainty. #5 above only says that you’ll close on the new home if and when you find a buyer for your home. Not much certainty there.
There are strategies one can use to increase their odds. When I’m representing a seller, I don’t recommend discarding an offer merely because it’s a contingency. Perhaps the home the buyer needs to sell will sell quickly. Quicker than my listing. I will need to check out their listing. What’s it priced at? Competitive with the market? Condition of the property? Marketing strategy of listing agent? In other words, if there’s a strong chance their home will sell before mine, I may recommend to my clients to go for it.
*to be continued – Next week we’ll look at different strategies that a buyer can use to increase their odds of successfully completing the contingency sale
-Mike