Contingent Real Estate Offers: Worth the Risk?
The Real Estate market in the Vancouver, Washington area is still a tight seller’s market as of February 2108.
What this means is there is not enough inventory for the number of buyers seeking to buy a home.
If a home is in good condition, and priced reasonably, it often fetches multiple offers.
While this sounds like it’s good for sellers, it can create a situation where sellers fear they won’t find a suitable replacement home.
We are seeing more “contingent” offers than we have in a long time.
A contingent offer is one where the buyer promises to buy a particular house only if his/her house sells.
There are a few potential pitfalls to contingent offers for the buyer making the offer.
1. Upon acceptance of a suitable offer, the owners of the home the buyer’s would like to purchase won’t want to stop marketing the home while waiting for the buyer’s home to get on the market and get sold. So, the offer will be put into a “bumpable” position. Meaning, if another offer comes that is not contingent and can close sooner and the first offeree cannot perform, the seller will take the second offer and the first buyer will be bumped.
2. Making a contingent offer may create a need to aggressively price the buyer’s current home. This could cause a need to accept a lower offer than would otherwise be necessary in order to perform on the purchase, which means potentially leaving money on the table.
3. Contingent offers can vary from one to the next. While one may state that the contingency is removed when the buyer accepts an offer on his/her house, this is not always the case. As Phil Lunnon, a Realtor with Lunnon Realty in Lakewood Colorado states, "The contingency may continue until you actually close on the house, and the seller may be able to accept other offers all the way up to that time” (Realtor.com Contingent Offers Are Useful For Buyers, but Will They Turn Off Sellers? Para 9).
Another issue is the emotional issue. While purchasing a home is a business transaction, it is also an emotional transaction. People “click” with a particular home and start visualizing living there.
Getting bumped out of position can be a hard pill to swallow for some folks.
There is one scenario where a contingent offer might be less risky for the buyer and that is there is already an accepted offer on the home that needs to be sold. In this scenario the contingent offer is only contingent upon the successful closing of the buyer’s current home.
Sellers often come out ahead financially if they sell their home before making an offer on another home.
We understand first hand the difficulties that sellers and buyers are facing and we can help you develop the right strategy for your goals, hopes, and dreams.
If you are ready to discuss your options and strategies, contact us today for your no-obligation consultation!
For more information on your neighborhood or a neighborhood you are interested in, visit our Market Insider page.
For more information on Vancouver, WA area communities, visit our Communities Served Page.
Ron and Sherry Patterson
More topics you may find helpful: