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Hi, first post in this forum, although I'm a long-time reader. Location is Montgomery County MD (suburban Washington DC). I am in need of some opinions and advice from experienced realtors and sellers who have been through this.
Husband and I are going to look at a property on Saturday that recently went under contingency contract with kickout. Our realtor contacted the listing agent to arrange for us to see the property, and the listing agent responded they were interested in other stronger offers... (he included those ellipsis in his response)
I assume (perhaps wrongly) that the contingency is probably because the buyer #1's current home needs to be sold in order for them to secure financing.
Our financial situation: great credit scores, annual income of close to 300k, healthy retirement funds, and husband has both a military pension and VA disability rating that is high enough that we can get a VA loan with no funding fees. No debt besides our current mortgage and utilities.
We have enough cash on hand for a conventional loan + closing, or we can do a stong contingency with a VA loan, based on the equity our current home (currently financed with a VA loan) + our cash on hand, which is worth more than the house/horse property we are looking at. I would prefer to use the VA loan again, and use our cash for things the property needs (a fence, barn, kitchen remodel, etc), but would do the conventional if needed.
We are scared to list our current house because we live in a "hot" neighborhood where houses go under contract in less than two weeks, and we don't have anything lined up to move into. (Our current house is cleaned, staged, and ready to list, should we find the right place)
Assuming this property checks all our blocks, how would you advise a client to proceed in bidding against a property under contingency/w/Kickout? It's hard to determine what to use as a first bid without knowing what the seller has already accepted. The property we are looking at is listed at 599k, and does need a fair amount of fixing up. What we really like about it is the location and land (it's the worst house, on a road with beautiful equestrian properties that are in the 700K-1M range).
We could do that, or do a conventional loan while still owning our current home. We are situated for both, and have loan approvals for both situations. I know from a seller's POV (this will be our fifth real estate transaction), conventional/cash is preferred. I just don't want to chance having two mortgages for two houses at the same time, BTDT, wasn't fun.
The house, ranch house, built in the 70s, we're looking at has been on the market for almost a year - which is a long time on the current market here in DC. The kitchen needs remodeled, badly, and that's probably why it's not selling - but I'm not seeing anything a VA appraiser would flag as a deal breaker. Our Realtor is pulling septic/well/electric/plumbing/roof history in advance of tomorrow's walk through.
Your best option for a strong offer is to not make it contingent on the sale of your current house. It's likely the sellers already have an offer based on a house sale. Unless your offer is for more money, which you can't know really, the sellers will likely stick with the current offer assuming it's also contingent.
If you can manage it, don't offer with a contingency of your own home selling. Also, with a VA loan, there are some items that a buyer is NOT allowed to pay for -- i.e., mortgage broker fee, termite inspection. Talk to your lender about the fees that aren't allowed. The seller is allowed to pick up some of them -- if he's in the mood to do so. But if there are other offers on the table, you should go in without any closing costs, if at all possible. If your current house is as hot as you say, then you should be able to sell it quickly, so you probably won't be stuck with the double payment very long.
I'm curious at the listing agent's comment that they are looking at "stronger offers" -- stronger than what? The one they are working with currently? Or does he know what you are planning to offer? (and if so, WHY?)
If the price is a good price for the house, then just go in strong with as few stipulations as possible. What you want to convey is that you are buyers with no drama.
As a property owner (not a realtor) an offer contingent on the sale of the buyers current home is about a 2 on a ten point scale. Any offer that's ready to proceed to closing -even contingent on financing - would be a "stronger"offer, imo. (Unless it's a seriously lowball offer).
The way I would do it is write the offer NOT contingent upon your house selling with the conventional loan. If accepted, get your house on the market and get it under contract. If you can get it to close quickly, and ask for a lease back until the new house closes, then you can switch to VA. In Texas, financing it none of the seller's business once the initial finance addendum has been signed, so if a buyer changes his mind on the type of financing or the amount down, no paperwork has to be signed by the seller.
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