Home Buying in 90266>Question Details

Kevin Ward, Real Estate Pro in Hermosa Beach, CA

How much does it affect Buyers' ability to negotiate a good price and get their offer accepted if they have to sell their house first.?

Asked by Kevin Ward, Hermosa Beach, CA Fri Jul 6, 2012

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I think it would be hard to overstate the disadvantage of being a buyer with a must sell contingency. You may get your target property under contract but the agreement won't be worth much if another offer comes along before you are able to fully commit to the purchase. This will be less of a factor if the home you are pursuing is overpriced or less desirable but who wants to buy THAT home? Maximize your leverage with a strong pre-approval from a direct lender, ability to close quickly and NO must sell contingency.
1 vote Thank Flag Link Fri Jul 6, 2012
Hi Kevin,

In a slow market, it can be better, but in a hot market with multiple offers it can be much harder to work with a contingent offer.

Kind regards,

Arpad
0 votes Thank Flag Link Wed Sep 17, 2014
If the home you are considering purchasing has been on the market over 90 days you have a better chance of getting a sale of your home contingency accepted. Your ability to negotiate price will be affected, but don't assume so. The comps should justify your offer. The marketability of your current home may be the most important; get it buyer ready, staged and priced well.
0 votes Thank Flag Link Wed Sep 17, 2014
Hello Kevin, You will not be able to get into escrow with a contingency of selling your home. Are you upside down or late on payments? If not, You have another option. If you want to realize more equity from the sale of your home, you may rent out your current home and buy another home with as low as half percent down payment and can contribute towards your closing costs as well with a minimum 580 fico score. If you have some funds to invest towards the purchase, that would strengthen the offers as well as not asking for closing costs in offers submitted.

I can go over the options you have available to you today if you haven't done something already. I specialize in Under 640 Fico Score Loans and offer credit repair at no cost to raise fico scores to qualify for better rates and terms. Although, with a minimum 580 fico score up to $417k, rates are still below 4% on 30 yr fixed FHA rates. You may still utilize this loan program between $417k and up to $729,750 with a minimum 600 fico score to qualify for Jumbo. I only need to ask a few dozen questions to give you what options you have available to you today.

Here is a link, flyer, maximum income limits and a needs list to gather for processing a loan approval. Let me know if I can be of any assistance. I have options that may work for your situation.

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0 votes Thank Flag Link Mon Nov 12, 2012
As you can tell by the previous answers, in today's competitive real estate market it is very difficult to negotiate an offer with a contingency for the sale of another property. If you must make your purchase contingent on the sale of your current property, one possibility would be to ask the seller for a 48 hour first right of refusal. This is a clause that says that if, after the seller accepts your offer but prior to you accepting an offer on your current property, the seller receives another offer on their property, the seller will give you 48 hours to get an acceptable offer on your property. If you don't get an offer on your property or are unable to remove your contingency, the seller may cancel his agreement with you. This is also a difficult contingency to negotiate but I have had it work in the past.

The best strategy is to get your property sold first and then begin to look for another home. Negotiate the longest escrow you can, possibly ask the buyer for the right to rent back after the close of escrow for a predetermined time and then start looking diligently for your next home. Good Luck.
0 votes Thank Flag Link Sat Jul 7, 2012
Depends on the market, depends on the sellers, depends on the offer, depends on the property the buyer needs to sell. There is nothing that falls into a "generality" in real estate. It's better for the buyer to have an offer on their current property with it contingent for them finding a suitable property.
0 votes Thank Flag Link Fri Jul 6, 2012
Hi Kevin,

We typically recommend that our contingent buyers first list their home. Once we are in escrow, we will have a (slightly) better chance negotiating a good price and get their offer accepted. Sometimes, it may make sense to offer slightly higher because of the contingency.

Best of luck to you!

Kevin McLaughlin, Broker Owner
Berkshire West Realty
info@BWestRealty.com
http://www.BerkshireWestRealty.com
0 votes Thank Flag Link Fri Jul 6, 2012
Some sellers won't even consider an offer with a home sale contingency, never mind negotiating a good price. In the current, low-inventory market buyers are competing with multiple offers and all cash offers. Also if the buyers have a loan on their current home, the amount of financing for which they can be pre-approved (another seller demand) will be less than if they had sold their home first.

Since you are also a local Realtor, what has your experience been with home sale contingencies?
0 votes Thank Flag Link Fri Jul 6, 2012
Hi Janie! You're right on. We're all dealing with it. It comes down to motivation. Many who want to sell their home and buy another are paralyzed with the low inventory because they're afraid of being "homeless" or having to settle for a home that's not exactly what they want. This is where our negotiating skills as agents must be honed...in this market...
Flag Fri Jul 6, 2012
In this day and age of multiple offers, it will set you back considerably. Most sellers these days will not wait for you to sell if they can get their price from someone else in 30 days.

I would advise you get your home on the market...at the very least...before house hunting!
0 votes Thank Flag Link Fri Jul 6, 2012
A sales contingency will definitely affect the attractiveness of your offer. In the current competitive environment ,due to a lack of good qualify properties on the market, unless your offer is significantly higher than other offers due to the risk of your property not selling, most sellers in today's market will not consider an offer contingent on selling the buyer's current home.

I also recommend to my clients to put their current home on the market, and once you are in escrow you may decide to make an offer contingent on the close of your current escrow. Although this is still a riskier offer for a seller to accept, the fact that you are in escrow may be enough for the seller to consider it, but you would still be in a competitive disadvantage to other "cleaner" offers that do not have a sales contingency.

For other information about buying or selling your home, see my award winning website at http://www.maureenmegowan.com
0 votes Thank Flag Link Fri Jul 6, 2012
Hi Kevin,

That's an excellent question and one we often get asked today. The answer is that it's a competitive market for home buyers right now with the number of homes, especially in the South Bay, at record lows. My partner and I strongly recommend to our clients that they first put their home on the market before looking for their next home. We were recently featured in this timely article on helping buyers get the winning bid in today's tight housing market. Check it out and please know we're here if you need any help.
http://www.chicagotribune.com/classified/realestate/buy/sc-c…
0 votes Thank Flag Link Fri Jul 6, 2012
Hi Kevin,
With there being such a low inventory of homes to choose from today, buyers are experiencing multiple offers on close to 50% of the homes today. Well-priced homes are very competitive. So with that in mind, we are advising our clients not to do anything that might weaken their offer. It should stand out to the seller as the obvious choice. Sale contingencies significantly weaken a buyer's offer and should only be used as a last resort. Great question, Kevin.
0 votes Thank Flag Link Fri Jul 6, 2012
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