Sellers: How to Handle a Buyer Who Must Sell Their Own Home
Your home sale is only as strong as your buyer.
And every buyer contingency could be a wrecking ball that demolishes the structural foundation of your deal. So when dealing with a buyer who has such a monumental task as selling their own home, you must make sure you cover every detail in advance. Or your deal could come crumbling down.
Buyer Home Status
There are three typical scenarios with a buyer’s home-sale contingency:
Buyer’s Home in Escrow: This is the best scenario for the seller. With the buyer’s home sale running ahead of your home sale, it will have less impact on the time it takes to close your transaction. Think of it like two dominoes. Yours will fall after the buyer’s falls.
You will want to see the terms of the transaction on your buyer’s home sale, too. Is their buyer getting a loan, preapproved for a loan, finished with their inspections and appraisal? What if the buyer on their home sale also has to sell a home? Now you’ll have another domino that must fall for your sale to be successful, adding risk. You need to what risks are beneath the surface.
Buyer’s Home Not in Escrow: If the buyer is still looking for their own buyer, you could be in for a long wait.
Buyer’s Home Not on Market: If the buyer hasn’t even listed their home yet, they are effectively starting from scratch. You can negotiate a period of time for their home to be listed on the MLS: for example, one day. Then, you must agree on when a backup offer can force the buyer to commit to you or walk away.
Contingency Timeframe
Before you come to agreement with the buyer, you must agree about how to proceed while your buyer tries to sell their own home.
The buyer will have 17 days to put their home in escrow, unless you negotiate a different timeframe. In the meantime, you’ll be able to continue to market your property for “backup” offers, just in case your current buyer fails to perform.
So what happens if you later get another offer?
Here are the two main options:
Immediate Buyer Notice: With this option, you can give the buyer a written three-day notice to remove their home-sale contingency; remove their loan contingency, if any; and provide verification of sufficient funds to close escrow without the sale of their home.
If they don’t perform, you can cancel the transaction and go with the new buyer.
Delayed Buyer Notice: With this option, you would have to wait at least a specified number of days before issuing the buyer a notice to remove their contingencies. That timeframe most commonly runs from 17 days to the original contract close date.
Market conditions, as always, will determine which terms you negotiate in a contingent-buyer transaction.
Thinking about selling your home? Want to discuss the best strategies with a Certified Homeowner Advocate? Call us today at 951-778-9700 or use the form below and ask for a 10-minute consultation.
Illustration courtesy of renjith krishnan | freedigitalphotos.net
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Contingent Buyers | Riverside CA Homes For Sale | When a Buyer Must Also Sell | Brian Bean and Tim Hardin Dream Big