Contingent Closings

If you already own a home but are looking to sell it and purchase another, it can be really tricky to know which to start first or where to begin. The noticeable difference in your options depends, of course, if you need to sell the first in order to pay for the next. We call this a type of contingent purchase, as the ability for you to buy a home is contingent on you selling your current home.

You can put in an offer on a new home either before you sell your current, if you’ve already put the current on the market but are waiting offers, and especially if you’ve already accepted an offer to sell your home. These make for all different types of offers on the new home and each do likely play a part in the decision of your offer being accepted. Your real estate professional should guide you through each scenario and what might be best for the market you are in.

The timing of a real estate transaction can be overwhelming and certainly unpredictable, so aiming for two transactions to complete simultaneously does come with headaches! Many might think it would be better to close the sale of the current home on the exact same day as the sale of the new home, right? It can! It has been done and people are able to do this just fine when everything goes as planned. However, often this is not an ideal situation if you do not have a back up strategy. The last few days before a real estate transaction can close are filled with disclosures and documents being signed, the final walk through, transferring of title, loan funding and deed recording. Many of these steps have federal or state laws deciphering a length of time required before proceeding to the next step. There are hundreds of details needing their t’s crossed and their i’s dotted on the first transaction before it can go on to fund the second transaction. While it can certainly be done in the same business day, it sure adds a lot more stress!

So, what would a back up plan look like? Typically when a sale closes before the new purchase is made, we see clients move in with family, friends, or into a hotel for a few days. You can also negotiate into your transaction a lease back where you pay rent to the new owners for those days you need. Finally, a pre-possession could be added to the contract if the new owner is willing to let you stay without collecting rent for those days – although this is often not a strategy that industry professionals prefer.

Either way or whatever options you may have – the process is slightly painful but entirely rewarding. If you have the right attitude, try to be proactive and responsive, have a back up plan and understand there might be a few hiccups along the way, your perspective will make all the difference! Happy house hunting!