Is a contingent sale right for you? The market is starting to change and contingent sales will be possible once again. We are old hands at this situation and we know how to craft a strategy that will give you the best of all worlds. Call DIGGS if you think this is a homebuying strategy for you.
What is a contingent sale?
A contingent sale means you make an offer on a home before you sell your existing one. You are only obligated to close escrow on the new home IF your existing home sells. If it doesn’t sell you are off the hook.
It seems like the best of all worlds. You only need to sell your home if you find a great replacement home, you are not in danger of being homeless and you only move once. Perfect, right?
If it sounds too good to be true, it probably is.
Maureen Follingstad bought a home in La Crescenta before her home in Long Beach was even on the market.
Hear how Maureen moved through this situation, the good, the bad and the cautionary advice she gives to people thinking of doing the same.
Below, we’ll unpack how a contingency sale works and show you how to do the same for yourself!
The first step in a contingent sale is NOT home shopping!
You might feel like home shopping is the first step in getting to your next home. You assume any other step is a waste of time because nothing will happen if you don’t find a home.
Respectfully, you are wrong.
The first step is getting a good sense of your home selling options.
- What is your home probably worth?
- What will you put in your pocket at the end of the day?
- What fixes/improvements can you do to increase your net profit?
Pro Tip: Choose DIGGS as your trusted advisor right away. We can guide you toward profit-making ideas and cut down on confusion from the very beginning.
Once you have an idea of your total cash situation you are ready for the next step.
It’s time to window shop.
Now that you have an idea how much money you have to work with you can establish a budget and start researching potential replacement home options. This process is pretty much the same process as when you bought. Make a list of your top priorities and find out where you can get your best mix of home amenities and location for your budget.
A contingent sale plan means you will only buy the right home. So, how good will this replacement home need to be to make this entire process worthwhile? I know many people shop for years because they just have a vague idea of getting a “bigger” home. Make a list of specifics – how many square feet or what floor plan, lot size, room count requirements you need in order to actually make this move.
Examine the options in all the possible neighborhoods. Your goal isn’t finding THE house, it is finding out if you can afford a home that works.
Pro Tip: Remind yourself that this is just research! If you fall in love before you are ready you’ll experience total stress or devastating heartbreak.
Before making a contingent sale, consult with your lender.
You might be surprised by your options. you *might* find out you can qualify for a loan large enough to buy your replacement home without the sale.
You might still sell that home after the purchase, but you can buy without a contingency. That would be great news, as you will see later.
More than likely, however, you will need to sell in order to purchase a replacement home.
Consulting with a lender early in the process sets you up for success and cuts down on the unbelievable stress that happens when you find a home to buy.
Pro Tip: DIGGS can connect you with expert and trustworthy lenders.
Understanding your contingent sale strategy
A contingent sale is a high-risk situation for the owner of your replacement home. It will probably take longer and may not happen at all if your home doesn’t sell.
In order to get your contingent sale offer accepted you will need:
- A really high offering price
- To give the seller great confidence your home will sell quickly
Now you reap the benefits of identifying your Realtor professional early in the process. You will can give your homeseller a well thought out business plan for getting your home sold right away.
Pro Tip: Work with a Realtor who has experience with contingent sales. Kendyl has done dozens of contingent sales over the decades, but agents with less than 10 years of experience have no idea how to cope.
Set Up Property Alerts
Now it is time to start shopping. When you are on the contingent sale game plan you are playing a long game. You are waiting for just the right home to come on the market.
When you work with DIGGS you get a premium home search tool that uses machine learning to help you identify **just** the right home. For example, if your heart’s desire is a home with an open great room the Multiple Listing Service (MLS) is not helpful. The only way to know if the floorplan is open enough is to visit the home yourself.
The DIGGS home searching tool uses next-generation technology to “read” the property photographs and learn if there is a great room and/or open floor plan. The tool also allows super slick stuff like comparing kitchens side by side or one-click access to all the backyard photos without clicking through every darn picture!
The right technology allows you to keep your options open while avoiding the fatigue of active home shopping.
Attack your improvements list
While you are waiting for the perfect home to show up, start moving through your list of recommendations from your DIGGS agent.
Your home will sell faster and for more money when it is in creampuff condition. Today’s homebuyers expect Insta-Worthy homes and will severely discount any home that doesn’t deliver that standard.
Paint, carpet, neutralize, declutter – all the stuff you know you need to do. Pro Tip: read our 30 day plan to getting your home ready to sell.
If you never find that dream home you’ll have made your current home a better place to live.
Review and update your plan yearly
Some of you will take years to finally find a home worthy of a move. Everything changes, so update your plan yearly, at a minimum.