Hey Everybody! Today I wanted to take a minute or so and speak about Contingent or Contingency In Real Estate. It has been coming up in the market more and more and really becoming a trend that we are seeing out in the market. Some of you may know what it is and some may not. This video will let you know exactly what it is so you don’t have to question yourself.
Contingency is basically, contingent upon the sale of a property in order to buy another one. For specific example; you need to sell the property you currently live in, in order to purchase another one. Regardless of if you are “buying up,” bigger home, downsizing or just want a different location or whatever reason. This is something that you see often if you watch HGTV’s Property Brother’s. They don’t necessarily say that the transaction is contingent however, you see them modifying and updating the homes of their clients, selling them and at the same time taking them out and submitting offers on a property that they would like to buy.
How to Handle a Contingency: There are a few ways to do this and it is really up to you. Speak to your Realtor to decide what is best for your situation and market conditions. Strategy is key to many things and Real Estate is no exception.
- List, Look and submit offers now – you can list your home for sale and start looking and submitting offers right away, while your property is still on the market.
- Sell and look – Sell your property, sign the contract, Open Escrow and start looking at properties and submitting offers.
- Sell, Contingency Removal, and look – Sell your property, sign the contract and open escrow. The Contingency period in every purchase contract is an agreed upon time after the opening of escrow for the Buyer to receive disclosures from the Seller, conduct property inspections and work on their loan a little bit with ordering and receiving the appraisal. There is a list of contingencies in every transaction, however, the time frame that coordinates to each contingency can and is usually negotiated up front. I digress- When you receive the Contingency Removal removing all, most or some of these it will put you in a “safer position” with your escrow on your property that you may be able to use to your advantage when submitting an offer to the home you want to purchase. However, it is worth mentioning that nothing is ever guaranteed but at this point, you will be in a way better position.
Submitting Contingent Offers: Something to keep in mind when submitting your offer is that the Seller of the property you want to buy may not want to have a contingent offer. Meaning that your offer on their property will only close escrow if your escrow on your current property closes. If this is the case, they have the right to reject your offer or advise you to re-submit after your property closes. In that case, you would just keep looking until you find something else you want. I would also stress that if you do have a contingent offer what I like to do with my clients is submit a Biography letter, provide the listing agent of the property you want to buy a copy of the contract and escrow instructions or anything else from your escrow that will show a solid pace in closing the escrow on your current home.
Well, that about covers it for now. Remember this is not all there is to Contingent Escrows but it is some information that will be helpful to you if you are in that situation. If you have more questions about Contingency, feel free to contact me. I hope you have a great week and I will talk to you soon!