I can't sell my house until I find my next one ... Can I?

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I hear this a lot. It is a difficult scenario ... but it can be accomplished with success.

In order to effectively accomplish this goal -- the buyer (who needs to sell) must when writing a purchase offer on a property they would like to by select the: Sale and Transfer Contingency (S&T Contingency.) Essentially, in the purchase and sale contract there is a contingency that states that the buyer has to sell and close on their current home in order to purchase the new home. In this scenario, the seller is taking a chance that the buyers the house will not sell quickly in the time frame the buyer stated it would sell in. They are also bringing another party into the transaction -- the buyer of their buyers property. (Sound confusing yet?)

The Terms: Within a S&T Contingency is what's called a "Bump Clause." This clause ensures that the seller has an "out" within the contract. This clause states that if the seller gets another offer that has a better price, terms, or anything else -- they can "bump" the current buyer of their home. The terms of this "bump" are spelled out in the initial purchase offer and are usually 1-3 days. This essentially means that if you are buying a home with a S&T Contingency and the seller receives another purchase offer you could lose the house.

As the initial buyer, this "bump" doesn't necessarily mean that you lose the house -- during this period of the next 1-3 days you have the option to either: A. Show that you have a contract to purchase your home and remove the S&T Contingency; B: Secure a mortgage to cover the loan amount without the need to sell the current home and remove the S&T Contingency; or C: Come up with the cash to close and remove the S&T Contingency.

The main thing to remember is if you are purchasing a property that is very desirable (i.e. priced right, in great condition, and in a desirable area) you may not even get the seller to negotiate your offer. You may have to attach better terms to your offer, a higher purchase price than you'd consider otherwise, or a combination of both.

Additionally, you have to make sure that your home is ready to put on the market immediately. Time is of the essence in this case as any delays sprucing up your home are not well spent when you have a contingent offer on another property. It may also be a good idea to talk to your mortgage specialist to see if you can have ready a pre-approval to purchase the new house without the need to sell the current one. This is risky ... but if you absolutely have to have the new house - it may be worth it. After selecting this option ... it's imperative that you offer incentives to get your house sold so that you don't have 2 houses to call home!

So as you can see ... it is possible to make a buying decision on a property and then sell your home.

If you have any questions ... please don't hesitate to contact me at 585-645-1258 or via e-mail: Mike@MikeWalkerHomes.com

Regards,
Michael Walker