Homes are selling fast in the Reno/Sparks market, with little to no inventory on the market buyers are feeling the pressure and acting fast. There are many common contingencies within the Residential Offer and Acceptance; to name a few, the loan, inspections, and closing date. Other contingencies may be added to an offer and this post will touch on the home contingency. Contingencies are included in the offer to protect both buyer and seller, however, some contingencies that protect one party over the other can weaken an offer and add extra risk.
Obviously most people that own their home need to sell before they can finance a new one. The sale of a buyer’s current home makes a new offer contingent (or dependant) on the successful closing of the buyer’s current home. If the buyer is unable to remove this contingency (sell current property), they have a way out of the purchase contract. This is great for the buyer, but as you can imagine, sellers are hesitant to accept this type of offer. In a competitive market such as ours, where buyers are competing for limited inventory, this type of contingency can work against the buyer.
If you have to work with this type of contingency it is important to know that the seller has as many legal options to cancel the contract as the buyer. Most sellers will request milestones (or dates) in the contract to ensure that the contingent property is on track to sell in a timely manner. The dates that the seller will be looking are very similar to those that are in the current contract. A good listing agent will request comparables on the contingent property to make sure it will appraise and make sure it isn’t extremely overpriced. Contingent dates that should be included in the contract to protect buyer and seller should include; date property will be sold by (if not already in escrow) and closing date. It can be tough to close both properties simultaneously, if possible it is best to request a few day rent back to close the new home.