Contingent Upon Selling My Current Home – “The Blues” or a “Celebration”?
Posted on: February 9, 2009
Portland Oregon is all abuzz with real estate activity despite very real economic events across all industries. And, I’d love to hear a consumer’s take on this as well as brokers’; Should people move forward and offer to buy a home when they need to sell the one they live in currently – first?
The cat chases its tail. “I need to sell my house first but I don’t want to sell until I have another house to buy!“ Yes, that’s the never beginning and never ending loop in spin cycle. Our clients need our help finding the “START” button so they can escape the dilemma.
Sell First, Then Buy: OK good job. In this track, clients have their exact amount of sale proceeds in the bank and theycan buy non-contingent. Where do they live now? In this track, they are most likely living in a temporary rental or have made other arrangements. In some cases they have rented-back the home they SOLD. As a Real Estate Broker – you have a clean transaction selling the home and a clean transaction as their buyer broker. Clean, meaning non-contingent.
CONTINGENT – BuyFirst, Then Sell: OK, is this “The Blues” for a client and Broker alike, or is this approach a “celebration” of rescue from the “I need to sell my house first but I don’t want to sell until I have another house to buy!” – never ending loop spin cycle. Or, is this simply just the start of a different loop and spin cycle?
Negatives:
1.) Client may select a home, get offer accepted contingent, and the be “bumped”. In this case, the client is now offering to sell a home but without another selected to buy.
2.) Client may select a home, get their offer accepted contingent, and the have their buyer unable to complete the transaction so the client can’t then proceed with their purchase. In this case, the client is back to having their house listed and a home selected to buy, but still contingent.
These two scenarios are why some clients and some Brokers prefer to seperate the two transactions and plan, from the start, to sell one home first and THEN buy the other next. And yes, the client accepts that an interim living arrangement is inconvenient but the lessor of evils.
Positives:
While two seperate transactions, and interim living arrangements MAY be ultimately required, proceeding “CONTINGENT” at least gives the client a chance to make one move and avoid temporary living arrangements.
What do you think?
Seems like I ask 10 people and I get 10 unique responses.
11 Responses to "Contingent Upon Selling My Current Home – “The Blues” or a “Celebration”?"
February 10, 2009 at 3:57 pm
Buy First?? Be prepared…
In today’s local Portland market the most important consideration is PRICE. Our present inventory makes our market extremely competitive to sell a home. This is why it is critically important to be prepared to establish a price that is compelling.
If you choose to buy first, be prepared. It may take months to get an offer and the possibility of having to straddle two mortgages at the same time…have you ever tried to ride two horses at once? It’s a very tricky prospect unless you know what you are doing..you could end up in the mud.
Start first by obtaining a CMA (Comparitive Market Analysis)from a reputable broker who knows your area.
Sage advise: Look before you leap!
February 10, 2009 at 4:06 pm
Ron, you know who’s newer to blogging than you? Me! So here’s my attempt to communicate. To me, your blog is AMAZING! (but what do I know).
As for the contingency issue, I would never have dreamed of recommending it prior to 2007 but it seems it’s now a little more vogue, now that there’s not a frenzy going on around each house for sale. Still, there is too much unknown about making a contingent offer. I have had people broken-hearted and deciding to do nothing after their house didn’t sell and the one they thought they were moving into escaped them to another buyer. I would just tell my buyers the scenarios you laid out and let them decide, but for a sure thing, it’s always better to have a bird in the hand (sell first). Then you know what you have to work with, and come on…does anybody really think they can’t find a house with all this inventory? Even if their dream house isn’t on the market, if the word gets out that they have cash in hand, someone will probably find them!
February 10, 2009 at 6:06 pm
I have personal experience at this one… My husband & I raised our family in Gresham and decided to downsize last year 2007. We ended up purchasing a small one level ranch in Vancouver at the height of the market…We were SURE that our home would sell in Gresham,. well it didn’t. It’s been rented for the last 1 1/2 years. In fact we probably have lost close to $50,000 because of the downturn in the market values. Our Vancouver home is great, but has lost value as well.
Saying all of this, I will always beleive Real Estate is the way to go as far as investments. The market will turn around and housing prices will go up. My advice would be to make sure to sell and buy in the same market. That way if you have to sell low, you are buying low…
February 10, 2009 at 8:36 pm
Timely question. Working now with a couple losing sleep over that question. They were not considering a move until ‘The perfect place’ showed up on the market at a ‘now possible price’.
The current house, is in a desirable, close-in location and attractive…in short sellable. However, not listed, and my market analysis recommends a few improvements that should be done to achive the best price possible.
We talked about their unique situation, the state of the market, possibilities of alternative financing ect.. and the worst case of double mortgage payments (they can’t afford them)
My advise to them was to look at there house with fresh eyes. If they want to move then start with a plan. Get the house ready to show its best and that ‘perfect houses’ are a lot like buses..if you wait around another one always seems to come along.
February 10, 2009 at 9:08 pm
Delivering the information my clients need to make good decisions. That’s the mantra I live by. One of the biggest disappointments clients have with their Realtors is unmet expectations. The fault often times lands on both parties. That being said, it is imperative to educate our clients on the strategies, opportunities and pitfalls of certain actions.
My preference is to suggest selling first then buying. It really makes sense to be done with one transaction before embedding yourself into another. Signing contracts based on assumptions is a dangerous course to take.
Assumptions are the mother of expectations. You can quote me on that.
February 10, 2009 at 9:50 pm
Delivering the information my clients need to make good decisions. That’s the mantra I live by. One of the biggest disappointments clients have with their Realtors is unmet expectations. The fault often times lands on both parties. That being said it is imperative to educate our clients on the strategies, opportunities and pitfalls of certain actions.
My preference is to suggest selling first then buying. It really makes sense to be done with one transaction before embedding yourself into another. Signing contracts based on assumptions is a dangerous course to take.
Assumptions are the mother of expectations. You can quote me on that.
February 12, 2009 at 6:31 pm
Ron —
Great blog! I agree with Paddo that setting up expectations that can’t be met creates big messes. Though I would not talk a seller out of accepting a contingent offer under the right circumstances (buyers have a motivated price and good property to sell), I would generally talk a buyer out of making that kind of offer because it takes most of the negotiation power out of the equation. Unless the buyers have a house that is already on the market and has received an accepted offer that appears to be on the way to closing, I wouldn’t be thrilled about getting them into contract on another property! Thanks for the blog forum!
February 13, 2009 at 5:04 pm
Whenever you decide to move, whether it’s to another house, another City, onto a boat, into an apartment, you are rolling the dice – taking chance on the biggest aspect of any human life – shelter. For a very short period of time, in what will prove to be an anomaly of a market, the risks were minimal. You could find a house, write a non-contingent offer with a 35 day close, go home, put your house on the market, or call the 5 people who had said “if you ever sell…” have a signed agreement within a week and all was rosy – on to new life. If you ended up not liking the neighbors, wait 6 months, and do it again, for a profit.
I’m happy to see those days gone. We’ve settle back into a market where rather than having investors, flippers and speculators driving the prices, the rest of us buyers who want to move, for whatever reason, can ask: “Can I live here?, “Is it really worth that?” and “Will it be a good LONGTERM investment?” To me – the basic fundamentals.
So roll the dice, SELL FIRST, yes you may have to live in “temporary housing” – been there, done that – But it’s worth it. Your next house is out there waiting for you.
February 20, 2009 at 7:45 pm
I have always counseled my Sellers and Agents to get the home listed (and sold) first. There are really two issues that you need to discuss. #1 If I make a contigent offer as a Buyer my bargaining position is much weaker if I have a home to sell first. #2 When the listing does get an offer the Sellers are more likely to accept a lesser price because they are so focused on the new home. If you explain the fact that a contigent offer may cost them thousands you can usually get them focused on listing and selling wich ultimately is going to have to happen first anyway.
February 21, 2009 at 8:33 am
Great blog Ron and a good topic. My Wife and I have thought about selling our own home and buying a fixer in the same neghborhood. We would definatly want to sell first and make a contingent offer. If the contingent offer falls through have a back up plan. Our is to move into our rental house for a while or rent.
We have done this since 1992 and it has been a great way to get to the size and area that we wanted. When houses were selling like hotcakes even funky houses with bad floor pans, busy streets or other factors would still sell fast.
I have always bought houses based on how well they can sell.
That’s what I advise my clients. Real estate is still and will always be the best investment in my opinion. Like I tell the Wife. I always have a plan B. She said what was my plan B for Her?
I said you are plan B! Banda Bing!!
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February 9, 2009 at 6:29 am
Today, it is good to help people move forward with their lives if it makes sense for them. Contingent,… sure. I’m OK with that. Sell first…. sure. I’m OK with that too. For me, I know how to do both. I just want people to use the tools we have for them and maove forward with lofe and life’s natural plans. Moving can be a great thing and hey, that’s what we do. We help people move forward.