The Pros/Cons of a Home Sale Contingency for a Buyer
The good & the bad of a home Contingency For buyers.
Most buyers need to sell their existing home in order to purchase a new one. This is especially the case for home buyers that are looking to trade up. The home sale contingency gives buyers the time they need to sell and mitigates their risk to ensure they don't lose their deposit.
In doing this however, it is shouldering the burden of risk on the seller. By accepting a home sale contingency, the seller is losing marketing time and possibly other opportunities in selling their house. It essentially becomes a little of a gamble for the sellers. They are gambling that the buyers house will sell quickly. It’s also a process that the seller’s have very little control over. For instance, the seller can’t make a buyer stage their house a certain way to make it more attractive or force them to reduce the price. They are stuck in a holding pattern doing a little hoping and praying.
The Pros for Homebuyers are:
- Avoiding owning 2 Homes & paying 2 Mortgages
- Being able to "lock'' in the next house so they don't end up homeless
- No risk to the Buyer’s deposits should they not be able to sell their house.
The Cons for Homebuyers Are:
- They will still need to move forward & pay for home inspections, Bank fees as well as appraisal fees. Should the deal fall apart, none of those costs are reimbursed to the buyer.
- A buyer may potentially need to pay more for a property then compared to if they were to make an offer without the Home Sale Contingency. The reason for this is that the seller is taking on more risk of a buyer’s ability to perform. Therefore, they will want to be compensated for that risk.
- Should it be a multiple offer situation then chances of winning the bid are greatly decreased unless the buyer pays far over and above the next competing offer....