Buying your dream home can be no easy feat, and may even require you to place an offer on the home before you’ve sold yours. There’s no one who likes to be paying two mortgages at once, and when you’re stuck with your old home while trying to buy a better home for you and your family, you naturally want to find an option that can get you the best of both worlds.
You may be surprised on knowing that you’re not the only homeowner who’s in this dilemma and that there’s a solution that can guarantee you a fail-safe in case things don’t work out how you expect. A contingency clause can be included by your realtor when placing an offer on your dream home to ensure that you’re not left paying two mortgages while living in only one home.
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What Does a Contingency Clause Mean?
When you’ve found your dream home and need to place an offer straight away, some thought needs to be given to what will happen to your existing residence. For those who want to purchase a house but only if your current home sells first, inserting a contingency clause in their offer is ideal.
With a contingency clause, if your offer for the potential home is accepted, you have the liberty of backing out of buying the home if your current home doesn’t sell first. This can help you shirk off from paying two mortgages for two different properties.
It ensures that the sale for your dream home only goes forward with you as the buyer when you’ve sold your home to someone. However, be aware that your home buyer can also back out of their offer on your home if they have a contingency clause in their offer as well.
If you’re unable to find the ideal buyer for your current property within the stipulated period mentioned in the contingency clause, the whole deal can fall through.
Kick-Out Clause from Home Sellers
Your contingency clause can protect your potential home from being sold to anyone else as the seller cannot keep the home listed on the market. When you are making an offer on a house contingent to selling yours, your seller could also choose to include a Kick-out Clause for their benefit too.
A kick-out clause stipulates that your home seller can sell the home to someone else willing to buy the property without a contingency clause. The seller will give you notice of the same, and then you can decide whether to immediately buy the home or let it go.
Know What You’re Looking for and What You Need
If you’ve decided to sell your current home in favor of another location that is more ideal for your requirements and family, it’s imperative to find your dream home as quickly as possible.
When you’re living in a competitive and desirable location, your home could be sold as soon as you put it on the market and you would need to find your next home within a small period.
From neighborhood to home design, you should have discussed all details with your realtor (if you’re using one) or know all of them yourself before you begin your home search. It can make the process quicker and more efficient.
Think About Potential Taxes
Buying and selling a home within a short span can make you liable to pay different taxes depending on which state you are in. All states require you to pay Capital Gains Tax (if you qualify for it).
Depending on how long you have lived in your home, you may have to factor in the costs that will be going towards taxes before you start looking into how to buy a house contingent on selling yours.
Picking the Ideal Closing Date
Many times, when you’re in the process of buying a home and selling a home simultaneously, it can become hectic and you may have to move out before your move into your new home.
To prevent a situation where you’re left without a residence for an extended period, choose a closing date on your current residence for at least a week longer than the day you are planning to relocate to your next home.
If you’re planning on choosing to sell your home and then looking for your dream home, consider extending the settlement date a bit further down the line. Your contingency clause on your offer for your dream home will be readily accepted by home sellers if they’re already aware that you’re currently in the process of transferring your property to another buyer.
Lease your Existing Home
If you’ve already sold your home before finding your next home, or the offer on your potential home has fallen through, you could consider leasing your current residence from your buyer.
Your buyer will most likely only agree to lease you the residence if they aren’t planning on moving in anytime soon or are flexible about their moving dates. When you lease your current residence, it can save you from paying two mortgages while still having a place to stay.
If you haven’t found your next home yet, make sure to rent your current residence for the ideal time it would take for you to close on a house. If you’ve already closed on a home but are waiting to move it, you could lease your current residence for a week more than your expected move-out date.
Have Alternate Options
If you’ve found your ideal home but can’t find any sellers for your current residence, there’s no reason to fret. You can real estate buyers online in multiple states that will give you a fair valuation of your home without conducting multiple inspections. You can take your current home off your hands in a matter of a few hours with no hassle.
You can also choose to competitively price your home to offload it quickly into the market. To determine a competitive price, you would need to have a thorough knowledge of your neighborhood and home estate prices in the surrounding areas.
Being aggressive about your selling your home by using tactics like staging, renovations, and so on can send a signal to your sellers that you’re serious about selling your home.
If you’re stuck in the opposite situation, where you’ve sold your home but have no place to move into, it’s better to think beforehand about temporary accommodation or a leaseback agreement with your potential buyers before you start on the contingency process.
Making an Appealing Offer
You may find that home sellers are reluctant to accept offers when they feature a contingency clause. It may be because real estate is competitive in the area, or they may have several other options to explore rather than settling for yours.
You have to ensure that your offer to buy your dream home is attractive enough to make the sellers wait for your home to sell. This can include placing an offer higher than their asking price, letting the sellers decide on a closing date, paying a higher upfront deposit for the home, among many other options.
In a competitive real estate market, you have to stand out from other buyers by putting a personal touch on the buying experience too. You can explain your situation to your sellers, who may be understanding and willing to wait for your home to sell without requiring additional benefits.
Work with An Experienced Realtor
Having an expert along with you while you’re in the stressful period of selling your current home and simultaneously buying another can save effort and unnecessary hassle. An experienced realtor will help you stage your home and make it more appealing so it can be sold earlier while showing you ideal homes for your requirements.
Since your realtor will also negotiate with both buyers for your current home and sellers for your potential home, it’s important to find an expert.
Buy Your Dream Home Contingent on Selling Your Existing Home with No Problems
More than 60% of homebuyers have already brought their first home and are looking to resettle or upgrade from their current residence. Many buyers, depending on the area, may have an advantage when it comes to including contingency clauses in their offers, because home sellers may be using the same technique to find their next home.
If your home has already been on the market before you have placed an offer on your next home, sellers may be curious to know how long your home has been on the market. For homes that have been on the market for more than 6 months and show no signs of selling, sellers may be less willing to accept the offers from their homeowners.
Protect yourself from unnecessary financial loss by paying for two mortgages simultaneously when you opt to have a contingency clause included in your buying offer.
If you have found your dream home and your seller isn’t willing to wait for your home to sell, you could always entrust real estate buyers to quote a fair price, allow leasebacks, and even give you a choice on your moving out day for a hassle-free experience.
While having a contingency clause can lessen the costs of buying a new home, you will need to conduct thorough home inspections by experts to ensure that you don’t have to pay for expensive repairs or renovations in the future after you move in the home.
Need to Get an Instant Quotation on Your Existing Home? Get in Touch With Real Estate Buyers You Can Trust
You may have to wait days, or even months to get attractive offers for your current home from buyers. You can miss out on your dream home with purchase contingencies that take a lot of time to fulfill. With iBuyer, selling your home instantly has never been easier.
You can get an instant home valuation to find out a close estimate to how much your home is worth and even get an instant offer from iBuyer if you’re short on time. There’s no need to clean or repair your home for you to get instant cash on your current home sale! Call an iBuyer Specialist at 866-655-1802 for an instant valuation!