Pros and Cons of Home Sale Contingency Purchase Offers

Traditionally, clients search for a new home and then submit an offer contingent on the sale of their current home. This approach has notable pros and cons for both buyers and sellers. This type of offer is typically acceptable to a seller when the supply-and-demand dynamic is balanced or favors the buyer (i.e., more supply, less demand).

However, in a seller's market characterized by limited supply and high demand, offers with a home sale contingency are generally not competitive and are rarely accepted.

There are two primary types of home sale contingencies:

Type 1: Your current home is not yet on the market or does not have a pending sale with an accepted offer. This presents a high risk for the seller of the home you wish to purchase.

Type 2: Your current home is in escrow with an accepted offer, and ideally, all buyer contingencies have been waived with a near closing date. This presents a low risk for the seller of the home you wish to purchase.

You will have more options as a buyer with a Type 2 home sale contingency, even in a balanced or seller's market. If your home has broad market appeal and is in a high-demand location, a Type 2 home sale contingency is a viable option for you to consider.

You should be able to negotiate terms with a buyer that include a Seller Occupancy (rent-back) after Closing provision, allowing you sufficient time to find and acquire your next home.

“Contingency for Sale of Buyer’s Property” pros and cons of this contingency clause for both the Seller and the Buyer in a real property transaction: READ MORE

Pete Sabine
Real Estate Consultant

Call or Text 925.787.2548
Dudum Real Estate Group
DRE #00889760