Contingency Confusion

Contingency Confusion

According to the dictionary, a contingency is dependent on chance or the fulfillment of a condition.  In today’s real estate market, a contingent buyer is one who must first sell their home in order to buy their next home.

Many contingent buyers begin the buying process by focusing on the home they want to buy.   They are often worried that their home will sell before they find their next one.  They don’t want to move twice or to be left homeless.  It is also more fun to go look at homes than to focus on selling theirs!

Today’s market of low inventory makes contingent buying challenging and confusing.  With more buyers than sellers at certain price points, contingent buyers compete with non-contingent buyers, some of whom are paying cash.  Contingent buyers often fail to realize that sellers generally want two things:

• Highest and best price
• A successful and low risk escrow.

A contingent buyer may miss out on their dream home because they have not positioned themselves to be an “A” buyer who can compete with non-contingent and cash buyers.

An “A” buyer who is making a contingent offer has done the following things:

• At a minimum prepared their home for sale by listing with a realtor who has a marketing plan ready to go once the contingent offer has been accepted.
• Already listed their home for sale contingent upon their successful purchase – in other words, they are seeking a buyer who will be flexible in their closing date in order to accommodate the seller’s purchase and will not commit to a move until they find their replacement property. Their home is already on the market and buyer activity can be demonstrated.
• Presents an offer that is reasonable to the seller by limiting the contingency period to 2-3 weeks, and demonstrating that their home is priced and presented to sell in this time period with a high degree of certainty.
• Put yourself in the seller’s shoes – present an offer that you as a seller would be interested in and offer something that others do not.
• Hire an agent who has successfully represented contingent buyers in the past and can offer examples of how they have done this.

Contingent buying can be a complicated process.  To be successful you need a plan and work with professionals who can chart a hassle-free path to your next home!