Contingent Offers in Real Estate: Pros and Cons of Simultaneous Buying and Selling
In the ever-evolving world of real estate, homebuyers and sellers are constantly seeking innovative ways to navigate the market efficiently. One such strategy is the contingent offer, a transaction in which you buy and sell homes simultaneously. This approach has its merits, but it also comes with its fair share of challenges. In this blog, we'll delve into the pros and cons of contingent offers, helping you make an informed decision when considering this route in your real estate journey.
**Pros of Contingent Offers:**
1. **Streamlined Process:** Contingent offers can simplify the transition between your old and new home, minimizing the hassle of temporary housing or storage.
2. **Financial Efficiency:** By synchronizing your transactions, you may avoid the need for interim financing, potentially saving you money on interest and fees.
3. **Negotiation Leverage:** Sellers may find contingent offers appealing, as they guarantee a buyer who is motivated to sell their current home.
**Cons of Contingent Offers:**
1. **Timing Risks:** Contingent offers are sensitive to market fluctuations, and if your current home doesn't sell as quickly as expected, you could face complications.
2. **Limited Inventory:** You may need to compromise on your new home choice if you're constrained by the availability of properties that match your criteria.
3. **Contingency Clauses:** Sellers may demand favorable contingency clauses, which could affect your negotiation power and potential costs.
Contingent offers can be a valuable tool in real estate, but they require careful consideration. Weighing these pros and cons will help you determine whether this strategy aligns with your goals and circumstances.
Be Prepared Well In Advance
STEP 1: Talk to your lender. As you
look for a new home, you need to stay in contact with your lender and get prequalified or pre-approved for a new loan and have a clear understanding of your budget. You don't want to waste time looking at homes out of your price range.
You can attempt to qualify for a new loan while carrying your original loan (if you have enough cash) or qualify based on a "pending sale" status. Your current mortgage would not be included; only the new one would be used to determine how much you can borrow. (This is a contingency based on the pending sale of your current home).
STEP 2: Find and work with and experienced Realtor®!
When dealing with 2 properties, it is crucial that everyone stays on top of deadlines and requirements. "your agents job" would be to ensure that this happens.
Our team has helped numerous families, through a challenging escrow where there are 3 or more parties all trying to coordinate and close on time, with much success.
so in this case,
"Experience really does matter!"
If you need a referral for an excellent lender we offer a wealth of trusted affiliates and can offer you a trustworthy recommendation.
Gratland and Associates are committed to helping clients accomplish their real estate goals. Whether that's buying or selling your home or buying or selling investment properties.
"We are here for you"