A Contingent Home Sale is when a homeowner is selling their current home with a contingency of finding and closing escrow on a new home at the same time; they are selling in order to buy. The contingency protects the seller and allows them to keep their home in the event that their home is in escrow, but are unable to find a suitable replacement property.
More about Contingent Sales
When the time comes to make the move, most homeowners need to sell their current home in order to purchase the new one. If proper care is not taken when listing the home, the seller could end up closing escrow on their current home before locating their next home, potentially leaving them homeless!
In order to avoid this, we include a contingency in the listing for the seller to find a home, thereby making it a contingent sale. Contingent sales can be a bit difficult to close.
Why are contingent sales difficult?
Contingent home sales can be very stressful for the timing factor. Finding the right buyer for your current home AND the perfect new home within a 2 – 3 week period can be very difficult if proper care is not taken.
The Domino Effect
These transactions can be like stacking dominoes: if one piece falls, it can all come down. One of the reason contingent home sales can be difficult is because both escrows must successfully close for you to move. If one escrow fails, the second is likely to fall apart as well.
Leaps of faith
Another reason why these transactions can be difficult is because, at one point or another, one party is going to have to take a leap of faith and commit to the purchase/sale, and sometimes they don’t jump. These leaps of faith are usually the removal of all contingencies and fully committing to the transaction.
Sometimes a buyer can be reluctant to release their contingencies if they know a seller has the ability to change their mind and decide to not sell after all. Other times the seller on the new home could be pressuring you as the buyer to remove all contingencies when the buyer on your current home is not done with investigations.
Your personal experience will depend on two main factors: the market and the agent you choose to work with. Learn more about contingent sales in our post, Buying and Selling at the Same Time.