Making a Conditional Offer on A Home!
Are you considering making an offer conditional on selling your current home?
In this article, I will go over some of the pros and cons of making an offer on another property with the sale of your home as one of the conditions.
No question that buying a new home while having to sell your home can be tricky, but if you cannot afford to carry two homes at the same time, it may be your only option because it eliminates the chance that you could own two homes; or worse, that you can't close on your new home because yours has not sold. So if you go ahead and commit to buying another house without conditions and yours fails to sell, you may not be able to follow through with the purchase of your new home. In this case, you will likely lose your deposit. But that's not all, you may be in a position where you've breached a contract and that can get very costly. So you want to make sure that does not happen. To prevent this from happening, you would want to put in a condition in your offer and that condition would be the sale of your home.
Now, if a seller is okay with that condition, they will normally give you 30 to 60 days to sell your home. If your home does not sell in that period, you get your deposit back, and you have not breached a contract, so it is a very safe way of purchasing. But, while it's safe and it does protect you, it is not necessarily effective. Let me explain why.
First of all, if the seller is willing to entertain such a condition, they are probably going to insist on a kick-out clause. What that means is, they're going to continue to market their home to other buyers. If they receive another acceptable offer from another buyer, they're going to give you somewhere between 24 to 72 hours notice to remove all of your conditions. And if you do not, then they can proceed with the other offer. Now, if this happens, you will get your deposit back. So it will not cost you any money but, it could cost you your dream home. And keep in mind this is only if the seller is even willing to entertain that type of offer.
Many simply will not even consider an offer that is conditional on the sale of the buyer's home. Why not? Well, consider it from the seller's perspective. When you make an offer conditional on the sale of your home, what you are effectively doing is you're taking the risk of not selling your home and you're transferring that risk to the seller. Well, they have no control over the sale of your home but, you do, because you're the one who's going to prepare it for sale, you're the one who's going to determine the asking price, and you're the one who's going to decide who you will have to market the property for you. Together, these factors will determine if you are successful in selling or not.
Now when you make an offer on a property and you make it conditional on selling your home, you're really telling to the seller that you're not all that confident your home is even going to sell. If you were confident, you wouldn't need that condition in the offer. Now if the seller feels they have a good property and they've priced it well, it probably makes more sense for them to wait for an offer without that condition. At the very least, they're going to want a really good price from you if they did accept your offer.
Here's something else to consider. You could end up doing this whole process several times before you're successful. That is, you find a home you love, you make an offer conditional on selling your home, and end up having the seller invoke the kick-out clause and you lose a house. So, now you start all over again only to have the same scenario play out again and again. Talk about frustrating.
Now you can probably start to appreciate why this is not the best strategy for buying a home. The good news is we have a solution that solves this dilemma and that is our Guaranteed Sale Program. With our Guaranteed Sale Program, we will give you the offer to buy your home if it hasn't sold by the time you need to buy your new one. This way you can take your time shopping for your new home and make sure you find the perfect home.
And, once you find it, you can go ahead and buy it, knowing you already have a firm offer on your current home from us. Now, we're still going to put your home on the market and if you get a higher price, well, great, you can keep the higher price. But, if it doesn't sell, well, at least you know that our offer will be there as a backup, and this allows you to avoid the sale of your home condition, and it allows you to make a stronger offer, and negotiate a better price.
So for more information on our Guaranteed Sale Program, you can visit www.DwightsGuarantee.com or you can just call me direct at 780-462-5002.