Home Buying in Boise City>Question Details

Alex, Both Buyer and Seller in Boise City, Boise, ID

Buying a new home with contingency to sell current home.

Asked by Alex, Boise City, Boise, ID Wed Dec 12, 2012

I've been wanting to buy a new home for the past 3 years. The only set back is according to have a big enough down payment that I want I have to sell my house first. But every time I find a house that I'm interested in buying by the time I get the nerve to put my house up for sale it's gone. Yesterday I was told by a realitor that I can try a contingency with a house I have my eye on.

Does anyone have more information on this? I've been searching the internet like a mad person trying to find information about it and I'm only getting fragments. Such as you put money down as a good faith measure but it doesn't say anything about where the money goes...is it considered part of the down payment? Is there more details I should know about a home contingency?

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11
I've had some recent experience with this, and I have a seller client (one of my listings) that has done and will do the same thing. I'd love to talk with you more about it. Let me know.
0 votes Thank Flag Link Fri Jan 31, 2014
Hello Alex,

The good faith deposit that you make on a home to which an offer was accepted by the seller should be placed in what is also known as an escrow account, specifically earmarked to your benefit. Generally, escrow funds are released by the escrow agent at closing. The same deposit that you referenced could conceivably be returned to you in the event the deal falls through for reasons beyond your control or agreed upon as a contingency.

Best Wishes
0 votes Thank Flag Link Mon Jan 27, 2014
Hello Alex,

The good faith deposit that you make on a home to which an offer was accepted by the seller should be placed in what is also known as an escrow account, specifically earmarked to your benefit. Generally, escrow funds are released by the escrow agent at closing. The same deposit that you referenced could conceivably be returned to you in the event the deal falls through for reasons beyond your control or agreed upon as a contingency.

Best Wishes
0 votes Thank Flag Link Mon Jan 27, 2014
Alex,

As you can tell by the numerous answers you have received, in the current market it probably won't happen unless the seller is desperate and in that case the home is probably not worth buying yourself as you would just be buying some else's problem.

There is another way of going about this that is less stressful and with much greater chances for success.

If you wish to contact me I would be willing to counsel you regarding a positive outcome to the difficult situation you find yourself in You don't need to search further - I can help you with this.

Blessings and Best Wishes.

Dale Alverson 863-3093
0 votes Thank Flag Link Wed Dec 12, 2012
I disagree that you would necessarily be buying someone else's problem. Some folks outgrow a house or want to downsize.
Flag Sun Mar 23, 2014
Alex- It is a tricky situation to buy and sell a house at the same time, but we do it all the time. A good agent can help you get your home sold and negotiate the purchase of a new home to closely coincide with each other.

Writing an offer to purchase a home with the contingency that you sell yours first does not put you in a very strong negotiating position if your house isn't even on the market. Inventory in Boise is at historically low levels, so sellers aren't too excited about taking their homes off the market while waiting for your home to sell. You might have better luck if you had a contract on your house.

There are lots of issues to discuss about this topic. I'd be happy to answer your questions if you'd like to give me a call. (208) 867-6949

Sue
0 votes Thank Flag Link Wed Dec 12, 2012
Sue is right! Put your home on the market and then look for a home. Worse case scenario you may have to stay at a friends for a week or so. You can always negotiate an extension on the time frame you close the house, but your offer will look better if you already have your home listed- and even better with an accepted offer.
Flag Mon Apr 7, 2014
At the speed of the current market, any contingency beyond financing and inspection, might be difficult to get a seller to accept. Days on market are decreasing and inventory is low.

I'd recommend getting your home ready to sell, put it up on the market and be prepared for a fairly quick sale. Once you've accomplished that, you're on your way to being in a far better position to move on a home that is perfect for you.

The implications of doing this may mean that you're headed into a short term rental while you shop for that new home. The luxuries of a buyers market have left the Treasure Valley (in most cases) and it's turned increasingly to the favor of the sellers.

Call if you have questions!
0 votes Thank Flag Link Wed Dec 12, 2012
Great questions Alex, I will do my best to answer all of them.

There are various answers to the question of "Can I put a contingency on buying home based on selling my home first". The quick answer is you can ALWAYS make an offer based on that premise; however, it is up the seller to decide if they are willing to accept it and under what terms.

Q: Where does my earnest money go?
A: Your earnest money is applied toward you purchase kind of like putting something on layaway at a store. For example, if you put $1,000 down as "earnest money"; at closing you would get that $1,000 as a credit toward your down payment and/or closing costs.

Q. Is there more I should know about a home contingency?
A. Yes! Your contract should be written clear and concise so that if someone that wasn't a party to the transaction could pick it up and read it and comprehend the exact desire of both parties. You need to outline what happens if another offer comes in without a contingency (can they "bump" yours and if so, how); what happens when you get an offer on your home, does your earnest money go non-refundable, etc.

I have probably sold 20-30 homes based on contingencies on selling another home and every listing agent / seller treats them a bit differently so you are sure to get a variety of answers. The key is packaging your offer so that a potential seller sees the benefit of accepting it. For example, if I was the listing agent, I would typically respond with reserving the right to review and approve both the price and the marketing plan for your existing home!

Hope this helps!
Jim Paulson, CRS, GRI, EPRO, SRES
Owner/Broker - Progressive Realty Corporatoin
0 votes Thank Flag Link Wed Dec 12, 2012
Hi Alex,

The Treasure Valley market at the moment is more dynamic than we have seen in some time, and as you have experienced, there is a lot of competition for homes that come onto the market. If you are selling your home as an equity sale (not a short sale) priced at the market for size, condition and location, you should find a buyer pretty quickly. Most of my listings are under contract in just a couple of days, even during this typically "slow" part of the year. Even short sales are going under contract quickly, although it takes more time to close them.

Consider getting your home listed and under contract before making an offer on your next place. If you make an offer on an existing home, your contingency will be more acceptable to the seller if your are under contract and moving to close. And remember that you also have a finance contingency in your purchase offer--if you are unable to get the financing specified in your purchase offer, you can walk away without penalty.

As for your question about Earnest Money, that is your good-faith deposit on the purchase of your next home. It counts toward your down payment when you close, so it is not a fee or additional cost.. There are cases when you may forfeit your Earnest money, and your agent can explain to you the rare cases when that could happen.

Finally, you might consider if building a new home is a good choice for you. It takes an average of 120 days for most builders right now, and that might give you the time you need to sell your existing home. I maintain a database of available lots in the area, and a team of of the area's most reputable builders for every price point as part of my office's Construction Concierge Service. I am happy to provide you more information if you are interested.

Good Luck on your exciting project!
0 votes Thank Flag Link Wed Dec 12, 2012
Contingency for Sale was a common thing a few years ago:
It is not so much now; the Market is too hot, and Sellers, if they do accept your Contingency, will have a "24 hour" escape clause.

You want the money from the sale for the Down Payment, and you don't want to move twice; I understand that. But it would be wiser to just SELL your house, plan on having a RENTAL for a few months, and moving twice.

Good luck and may God bless
0 votes Thank Flag Link Wed Dec 12, 2012
Hi Alex, Yes, you can make an offer to purchase contingent on the sale of your current home. This is not uncommon for new home construction. One thing to consider is the property you are purchasing. Short Sales or REO(bank owned) properties may not work for this situation, but equity sales or new home construction would.

It is very difficult to control the exact timing of closing on a short sale due to the process, and typically bank owned properties are priced so well that they receive multiple offers
0 votes Thank Flag Link Wed Dec 12, 2012
Your best situation would be to put your house on the market, get a good solid offer in place and then go and find your new house. At that point you would make an offer on the new house with a contingency on your contract that your present house must close prior to the new one. If for some reason it doesn't you would be refunded your earnest money as long as the contract is worded correctly. There are some sellers who will not allow a contingency like this so your choices on new property will be more limited but they are much more likely to accept it if you have a solid offer in place. If you don't you could end up with a "bump clause" on the contract and possibly some non-refundable earnest money. You need a good agent who can explain all the details and negotiate well for you in a situation like this.
0 votes Thank Flag Link Wed Dec 12, 2012
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