A home sale contingency is a clause that is often included in a real estate sales contract or an offer to purchase real estate. With a home sale contingency in place, the transacti✱on is contingent on the sale of the buyer’s home. If the buyer’s house sells by the date specified, the cꩲontract moves forward. If it doesn’t, the contract is terminated.

Here, we take a look at what buyers and sellers need to know♑ about home sale contingencies.

Types of Home Sale Contingencies

There are two types of home sale contingencies:

• Sale and settlement contingency
• Settlement contingency

Sale and Settlement Contingency

As the name implies, a sale and settlement contingency is dependent on the buyer selling their current residence. This type of contingency is used if the buyers have not yet received and accepted an 澳洲幸运5官方开奖结果体彩网:offer to purchase their current home.

In general, this type of contingency allows a se🐼ller to continue to market the home to other potential buyers, with the stipulation that the buyer will have the opportunity to remove the sale and settlement contingency within a specified period (typical🌠ly 24-48 hours) if the seller receives another offer.

If the buyer cannot remove the contingency, the contract is terminated, the seller can accept the other offer, and the 澳洲幸运5官方开奖结果体彩网:earnest money deposit is returned to the buyer.

Settlement Contingency

A settlement contingency is used if the buyer has already marketed the existing residence, and has a contract in hand and a closing date on the calendar.ꦦ

Because the property isn’t truly sold until the closing takes place, this protects the🌺 buyer if the sale of the existing residence falls through for any reason. If the buyer’s home closes by the specified date, the contract remains valid. If the home does not close, the contract can be terminated.

For the seller, the settlement contingency is less risky than a sale and settlement contingency. At least there's a deal in hand for the other residence.

Considerations for Buyers

Most home buyers need to sell their existing homes to purchase new ones, especially if they're "trading up" to a more expensive house. A home sale contingency gives buyers the time they need to sell and close before committing to a new home.

Few buyers can afford to own two homes and pay two mortgages for long. A home sale contingency can make for a seamꦬless transaction: the buyer can sell one home and move into the next since the new home is alrea🌱dy locked in.

The process doesn't help with other costs of home buying. Buyers must still spend money on home inspections, bank fees, and 澳洲幸运5官方开奖结果体彩网:appraisal fees. These expenses are not refunded if the deal falls through due to the property not s♛elling on tiღme.

Considerations for Sellers

A home sale contingency can be risky for sellers because there is no guarantee that the buyer's old home will sell.

Even if the contract allows the seller to continue to market the prꦍoperty and accept offers, the house should be listed under contract, making it less attractive to other potential buyers. Many people looking for homes will steer clear of a property that is under contract because they don’t want to waste time and risk falling in love with a property they may no💖t have the chance to buy.

Before agreeing to a home sale contingency, the seller or the seller’s real estate agent sh🌊ould investigate the potential buyer’s current home to determine:

• If the home is already on the market: If not, this is a red flag because it suggests the potential buyer is just thinking about buying and selling at this point.
• If it's listed at the correct price: A real estate agent can prepare 澳洲幸运5官方开奖结果体彩网:comparables to make sure the house is priced to sell.
• How long it has been on the market: If it’s been a long time, the home may be priced too high, the showing procedure may be difficult, or the market could be weak.
• The average time on the market for homes in the neighborhood: If the average time is 30 days or so, it could be worth the gamble. If it’s 90 days or more, the seller could be waiting with little chance that the buyer’s home will sell.

Good Reasons for a Contingency

A 👍home sale contingency might be an advantage for the sell💎er if the property has been on the market for a while. If the seller has had trouble finding a buyer, a contract with a contingency is still a contract and there is a good chance that the deal will go through.

In many cases, it is advisable to limit the amount of time the buyer has to sell a home to one to four weeks. This puts pressure on the buye༺r to lower the asking price and make a sale while preventing the seller from losing too much time if the transaction does not close.

ꦯA seller can include ▨a “kick-out clause” to provide a measure of protection against a home sale contingency.

A ki꧟ck-out clause states that the seller can continue to market the property and accept offers from other buyers. In this case, the seller gives the current buyer a specified amount of time (such as 72 hours) to remove the home sale contingency and continue with the contract.

If the buyer does not remove the contingency, the seller can back out of the contract and sell it to the new buyer.

The Bottom Line

Home sale contingencies protect buyers who want to sell one home b✱efore purchasing another. The exact details of any contingency must be specified in the real estate sales contract.

Because contracts are legally binding, it is important to review and understand the terms of a 澳洲幸运5官方开奖结果体彩网:home sale contingency.✤ Consult a quꦇalified professional before signing on the dotted line.