what do most do when they sale their house, put a contingency to close before buying? (contingencies, foreclosures)

[breji]

We decided to wait until next summer to sell, but just curious how it works. We will have 20% down in cash for the next house and won't make a cent off of our current house due to the market. We would be breaking even after realtor fees and we would be getting our initial downpayment back. When we buy eventually, do people put contingencies to sell their house first. Or, do they carry two mortgages, or do they sell their house...rent an apartment and then buy. The last option is less than ideal due to the fact we have two dogs and a cat. We are picky, and I'm sure the house that we pick would have several people intrested in it...so I'm not sure contengencies past an inspection are very smart...right? Seems like the ones we see online that we like are listed and then sale a week later...so it seems everyone else also likes the same houses we like!

[aneftp]

Originally Posted by breji

We decided to wait until next summer to sell, but just curious how it works. We will have 20% down in cash for the next house and won't make a cent off of our current house due to the market. We would be breaking even after realtor fees and we would be getting our initial downpayment back. When we buy eventually, do people put contingencies to sell their house first. Or, do they carry two mortgages, or do they sell their house...rent an apartment and then buy. The last option is less than ideal due to the fact we have two dogs and a cat. We are picky, and I'm sure the house that we pick would have several people intrested in it...so I'm not sure contengencies past an inspection are very smart...right? Seems like the ones we see online that we like are listed and then sale a week later...so it seems everyone else also likes the same houses we like!

Consider yourself lucky if you can "just break even" after realtor fees by selling your home (if you brought in 2004-2007). Are you sure you can even break even? Why not just sell right now if you can break even and get your downpayment back? You home could go down even more next year. But home prices are going any where for the near future. Even if you "break even," you really aren't. You are probably still coming out ahead because you would have lived in your home essentially rent free for the time you owned your home plus the tax benefits.

Now back to your questions:
1. Sure you can put your home on sale with a contingency clause to sell your home. However, most homeowners have "kick out clause" Meaning the home you are a contingency clause on will reserve the right to continue marketing the home. If there is a counter offer on that home, you will have 24-72 hours to remove your contiguity or the contract will be voided and those homeowners will go with the non-contingency contract.

2. How you feel about carrying two mortgages. If you are financially sound, can you carry two mortgagees indeterminately ? Would you be willing to sell your home for less than what YOU THINK it's worth. What you think your home is worth is different than what the market thinks your home is worth.

Honestly, you face what a lot of currently homeowners are experiencing. They want to move from their current home, but don't know what to do if they can't sell their home, or can't sell their current home for what they want.

But a word of warning (depending on your location obviously because every market is different). There are millions of homeowners who are "waiting till next year" to put their home up for sale. So if you think you have competition now, wait until next year when even more properties are put on the market. Plus the "shadow" inventory the banks are holding onto and not yet listing as foreclosures.

It's a rough market today, in 12 months and on. Housing has probably stopped the free fall but that doesn't mean it won't face a few more bumps in the road. Most people don't expect a full recovery until 2012 when all the bad loans would have made itself out of the market.

[redpanda]

If you can show income to carry 2 mortgages, you'll be allowed to do that. But mortgage companies have really cracked down and will NOT allow you to carry more than your income supports these days. No more buying your dream house and then selling at leisure, unless of course you can afford to do so.

Most people I know of in this situation are doing what we are--selling their house and THEN looking for another. I personally would never buy a house with a "must buy" or "must sell" contingency, it's just too iffy. From what my mortgage guy said, most of the mortgagers will consider your first house more or less "sold" when the buyers' financiers fully approve their mortgage. So then you have the "all clear".

We're preparing ourselves to have to find an apartment and move twice. Not my favorite idea, but better than "settling" when there's not much inventory.

[middle-aged mom]

Originally Posted by breji

We decided to wait until next summer to sell, but just curious how it works. We will have 20% down in cash for the next house and won't make a cent off of our current house due to the market. We would be breaking even after realtor fees and we would be getting our initial downpayment back.

I certainly hope your projections for breaking even, next summer, hold true.
Given that foreclosures are not expected to peak until 2011-12, this seems optimistic. What matters however, is what's going on in your local market.

Most sellers will not consider an offer contingent upon the sale of your existing home. Many will however, consider an offer contingent upon the close of a pending contract on your home.

[gold*dust1]

Originally Posted by breji

We decided to wait until next summer to sell, but just curious how it works. We will have 20% down in cash for the next house and won't make a cent off of our current house due to the market. We would be breaking even after realtor fees and we would be getting our initial downpayment back. When we buy eventually, do people put contingencies to sell their house first. Or, do they carry two mortgages, or do they sell their house...rent an apartment and then buy. The last option is less than ideal due to the fact we have two dogs and a cat. We are picky, and I'm sure the house that we pick would have several people intrested in it...so I'm not sure contengencies past an inspection are very smart...right? Seems like the ones we see online that we like are listed and then sale a week later...so it seems everyone else also likes the same houses we like!

We used a "subject to sale" contingency on new construction. We were the only offer on the table so it worked for us. Fortunately our home got a valid contract within 30 days.