fbpx
Wedgwood Home Twilight Back Yard and Patio

What Does It Mean When Buying a Home Contingent?

What Does It Mean When Buying a Home Contingent?

Share
Share
Share

What does contingent mean when buying a house? The quick answer is “contingent” in real estate talk means the home is in a contract but cannot close until the buyer sells their house. Or as we say the sale of the home is contingent on the sale of the buyers’ house. The actual process of buying a home contingent is a bit more complicated. Keep going for more information.

Why are we talking about what contingent means when buying a house? We thought it was a myth that someone could buy a home contingent in Seattle? The recent shift in the market (check out Roy’s Blog and Video Coffee with Roy | Seattle Real Estate Market Shift) is allowing more home buyers to buy a home pending the sale of their own house.

Recent Contingent Purchase Case Study

Lindsy just came back from maternity leave a couple of months ago. Her very first sale of the year was with a client who was buying a house here in Seattle that was contingent on the sale of her home in Texas. For years now buying a house contingent just wasn’t an option for many home buyers who were looking to move up in this market. 

Check out our blog for more information on all of the options on how to Move Up and Buy Your Next Home When You Own a Home.

Steps to Know When Buying a Home Contingent on The Sale of Your Home

  1. Make Sure Your Current Home is “Go-Ready”
  2. You Are Not Going to Get a Deal
  3. Do an Inspection and Review the Title Report 
  4. The Seller Has a Bump Clause
  5. Use the Same Escrow Officer for Closing

And if you wait until the end of this blog we have a pro-tip for sellers. 

The Five Things You Need to Know What It Means When Buying a Home Contingent

In this video and blog, we are going to go into detail about what it takes to buy a house contingent on the sale of your home. And we have an extra special pro-tip for home buyers who see “contingent” on a listing and are curious if they can make an offer as well.

Tip #1: Make Sure Your Current Home is Go Ready

You have five days to get your home on the market if you have made a contingent offer on another home. And in order to make sure your house sells quickly you need to be Go Ready. Kim just did a video about how to buy a home before you sell your current one. In the video, she coined the term “Go Ready.” This basically means you need to make sure your house follows our Diva Difference principles for your current home: Fix What’s Broken and make the Home Pretty so we can Market the Heck out of it as soon as you find the home you want to buy!

The bottom line is to make sure you contact someone on the team as soon as you start to get that “buy curious” itch so we can get working on your existing home. You can also check out Kim’s How to Sell a House video for more information. 

Tip #2: You Are Not Going to Get a Deal When Buying a Home Contingent on the Sale of Your House

Sellers are not really going to negotiate if they are taking their house off the market for a “maybe it will sell” transaction. There is a lot of risks when accepting a contingent offer. However, the buyer for sure knows if they have the money for their new house based on the market value of their existing home. And they do not need to carry two mortgages as they wait for your previous home to sell. Which can be super stressful. Remember sellers are used to getting multiple offers. Right now in this market both sellers and their brokers need to re-learn that buying a home contingent on the sale of another home is a real option. 

Tip# 3: Do an Inspection and Review The Title Report

This is where it gets a little stressful. Not only do you have to make sure your house is coming on the market, but you also need to do your due diligence on the home you are buying. Do an inspection and review the title report in detail!!!! Rocky just did a long video about how to buy a house in Seattle. He goes into a ton of detail about these two items. Check it out. 

Oh and did I mention that you will probably be able to negotiate with the seller on big items that come up from the inspection. This is a huge change from a couple of months ago. Check out our blog about everything you need about navigating a home inspection as a home buyer.

Tip #4: The Seller Has a Bump Clause and Can Bounce You Out of Your Contingent Offer

A bump clause means that the seller can bump you from the contract at any time. But only if they get another offer on the home that is NOTTTTTT contingent on a sale of a home. This means a regular old buyer comes in the door and can buy the home if they have traditional financing. You do have a couple of days to choose to go ahead and just buy the home with regular financing. Or you can get out of the transaction and get your earnest money back. The best way to not have to deal with the bump clause is to go back to tip #1. And make sure your home is go-ready. 

Tip #5: Use the Same Escrow Officer for Closing of Your New Home and The House You are Selling

Closings on contingent offers can be super tricky. Kim has been in situations where five homes closed on one day. And all of them were contingent on a sale of another home that all related to her closing. The best way to make sure everyone can close on time is to make sure the sale of your home is using the same escrow officer as the purchase of your new home. Basically, the escrow officer needs to take the funds from your home sale and immediately transfer it to the sale of the new house. I know it is complicated. But we can always explain it more in person. 

Check out our blog about the last two weeks of the home selling process. It goes into more detail about escrow and prepping your home for the new buyer.

Pro-Tip to For Sellers When Taking a Contingent Offer On Their Home

And as promised I have a pro tip for you sellers. Taking a contingent offer can be a risk but you typically get a higher than average price for your home. This is great in a fluctuating market. Just make sure the buyers perform on the inspection, title review, and their house is go-ready. The last thing you want is for someone to price their home way out of line with what the market is allowing.

That’s a Wrap: Five Steps For Buying a Home Contingent on the Sale of Another House

Wedgwood Home Twilight Back Yard and Patio

Thanks for spending time with us. In this blog we covered what it takes to buy a home contingent on the sale of another house. This is a great option for our clients who are interested in buying up to their next house but don’t know what to do with their existing home. Below are the steps as a re-cap of what we discussed.

Steps to Know When Buying a Home Contingent on The Sale of Your Home

  1. Make Sure Your Current Home is “Go-Ready”
  2. You Are Not Going to Get a Deal
  3. Do an Inspection and Review the Title Report 
  4. The Seller Has a Bump Clause
  5. Use the Same Escrow Officer for Closing

Want more information about what it takes to sell a home in Seattle so your home can be go-ready? Below are a few guides to help you as you navigate this process.

Seattle Home Seller Guides

We are here to help. Text “Diva Difference” to the Diva Desk Phone 206-271-0264 and we will send you our home seller guide. Or you can just contact us and we can do a walkthrough on your home and help you get it go-ready for when your dream home comes on the market.

Chavi Hohm

Chavi Hohm

More to learn