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The Risks Associated With Accepting an Offer from a Contingent Buyer

Your home has been on the market for some time, and after a few forgettable offers from some moderately interested buyers, one comes along who gives you an offer that’s far superior to all the rest. They love your home, they want to make it their own, and they’re willing to pay top dollar for it. However, there’s a snag: they can’t close the deal until their previous house sells. This is a fairly common arrangement, known as a contingent buyer.

Contingent buyers are somewhat risky for sellers. While the quality of the offer might check all your boxes and have you excited and what you’re going to get from your home, the truth of the matter is that they’re a lot riskier than a non-contingent offer. To put it simple, a contingent offer is an offer that is contingent on something else happening. If those circumstances aren’t met, the offer is rescinded, and you’re right back to square one on selling your home.

You might be tempted to say you just don’t want to accept a contingent offer, however with today’s housing prices being so high, most people simply wish to move the equity they’ve already built up in their previous home in order to pay for it. This means their previous house has to sell, and thus they’re a contingent buyer. It’s far more common than you might think.

Instead of simply refusing to accept one of these offers, here are a few tips for handling contingent buyers and minimizing the chances that you’ll wind up frustrated after the initial offer proves to only be a waste of time.

Is the Buyer Serious?

Has the buyer who made the offer been looking for quite some time, or did they just pop in to your open house out of curiosity and decide to put in their offer right then and there? If a buyer is looking for their new home and know they’re going to have to sell their home to pay for it, they’ve probably put in a good amount of effort to prepare their home to go on the market. In fact, their home may already be on the market already.

If your buyer is already well into the selling process, then you know that they’re doing everything they can to finish their side of the bargain and the risk of their contingency falling through is lower. If they need several weeks to get their house ready to go on the market, the odds of them finding a buyer themselves to fulfill their contingency are extremely low, and you’re probably going to wind up disappointed.

How Long Will It Take to Sell Their Home?

Your buyer may be ready to put their home on the market tomorrow, but the next question is how long will it take them to actually find a buyer and sell their home? A good buyer will talk to their homeowners association or have their listing agent compile a list of recent sales information, including comparable sales values and how long the homes were on the market before they were sold. If your buyer lives in an area where sales take 60 to 90 days on average, then you may be stuck waiting around for a sale that never comes.

Is Your Buyer Selling Aggressively?

Likewise, this listing information can give you a lot of valuable information as to how aggressive your buyer is being about selling their home. Are they listed well above comparable sales in their area, or competitively low to the point where they’re easily going to generate interest? It’s understandable to want to get the highest price for your home, but tossing out an expensive asking price and then playing the long-term waiting game in hopes of waiting for someone to fall in love and take the bait is not something that you want to see from a contingent buyer of your home. They’re clearly in no hurry to sell, so you should be in no hurry to accept their offer.

But if their home is in good condition and listed at a good price, plus they’re having open houses every weekend, there’s a good chance the sale will go through fairly soon and the offer you accept will come to fruition.

To put it simple, the easiest way to have a pleasant experience with a contingent buyer is to research your buyer and see what they’re doing. If they need to sell their home but it isn’t even listed or they say they’ll need two weeks to get it ready to go up on the market, then you’ll probably be biting your nails in hopes that the sale goes through before the contingency expires. If they’re doing everything right, listing aggressively, and making every effort to get the sale to go through, then that offer just might be the best thing that you could have asked for.

For more advice or quality assistance in selling your home, talk to a Valencia realtor by calling Dippy Real Estate at (661) 441-3304 today!