Contingency sales are a rapidly growing segment of our current market. In my 14 years of real estate experience, I’ve never seen a better opportunity for people to buy or sell a home.
I got into real estate in 2003 and in 2004, the market saw a real surge in buyer demand, so it was difficult for contingent buyers to get an offer accepted. When the initial market boom happened, it was even more difficult for contingent buyers to make a successful offer, as sellers had 20 to 30 offers to choose from.
During the housing crash, many people were unable to sell their homes, which meant that any contingent offers were frowned upon because you could buy a home but not sell your current one.
Between 2011 and 2013, the housing market had another boom. However, equity still hadn’t gone up quite enough for some homeowners to feel comfortable selling.
That said, the market changed again in 2014, and now the market is more stable. Sellers have enough equity to buy a new home, the market is healthy, and contingent offers are coming into play.
As a contingent buyer, it is best to have your current home under contract before you try to find your next home. If you try to make a contingent offer on another property and your current home isn’t even on the market yet, then the seller has to deal with a lot of unknowns. If you want to get the best price and terms possible, then you need to make sure your current home is under contract.
Now, if the sale of your current home falls through while you are under contract on your new home, then the contingency protects you. You will be able to get your earnest money back. The worst case scenario is that you might be out the money for the home inspection or an appraisal.
As a seller who receives a contingent offer, it’s incredibly important to make sure that the buyer has their home under contract. If they do, they are more likely to close on your house. Your agent can investigate where the buyer is in the contingency period. For instance, did they just get an offer on their home, or has their buyer already gone through inspections? Your agent will get you as much information as possible to help you decide if this offer is the best one for you.
Whether you are a contingent buyer or a contingent seller, keep in mind that contingent offers are no longer the red flag that they used to be. It can get tricky when you get a contingent offer and the buyer has accepted a contingent offer on their current home, and so on and so forth. Still, even those situations can we work out. We recently had a transaction that was five contingent offers deep, and the property made it into escrow.
If you have any other questions about contingent offers, give me a call or send me an email. I would be happy to help you!