Question on contingency in sale (agent, sales, housing, agreement)

[Soup Nazi]

I often see homes listed that say "sale subject to owner securing suitable housing". When does that contingency come into play? When a Purchase & Sales agreement is signed? Or can it be invoked later in the process? If the seller cannot locate alternate housing, how is the contract terminated?
Thanks for any help.

[bbronston]

I've never seen that but, with any contingency, I wouldn't agree to it unless there was a specific time frame for the seller to find something, a requirement for them to give written notice either way by the end of that time frame, a statement that if no notice is given by that date that the contingency is no longer valid, and specific consequences (i.e. return of earnest money would definitely be mentioned) if the seller decides to back out for that reason. I don't think I'd give much time for that to happen and I would want to make it clear that once they found something, that would satisfy the contingency...and that they can't back out later without a default if their deal falls apart. I definitely wouldn't pay for any inspections until I knew that the deal was solid. It's important to have your agent or attorney make sure that the time frames for everything in the contract start at the point that the seller confirms that they have found a place.

[NinaN]

Sellers do that here when the market has low inventory. Seller has to counter to include an addendum form COP with terms in the addendum. Terms are always negotiable so buyer needs to read and understand them, and counter or accept.

[FalconheadWest]

This is where a good listing agent comes into play to prepare their seller for temporary housing. No one wants to move twice, but it is really worth losing the sale of your home because you can't find something yet? Move to a 3 month apartment or extended stay hotel. Yes, it's money but in the end, it's a cost to selling your home, could be a tax write-off, and you have one part of the stress taken care of and you can concentrate on the purchase side. It's so stressful for many people to do both transactions at the same time when the market is moving fast, there is low inventory, and you're dealing with multiple offers on properties...

Back to your question, you need dates specified. Do not leave it open-ended. It's terminated by the terms of the contract just like any other contract.

[MikeJaquish]

I would not suggest you offer any deposit, well nothing non-refundable that is more than lunch money, and would not suggest investing any funds in discovery and due diligence until the "seller" decided that the house was actually "For Sale."
Right now, it appears that the "Seller" is "testing the market" rather than actively marketing to sell.
It is a close corollary to a listing agent's nightmare, "We really don't have to sell."

All that said, as Nina mentioned, if the market is red hot or the property is unique, one has to work in the market of the moment.

[kww]

in my area, this is very common (typically tying a rent back situation into play also)

from a sellers perspective, any contingency would be written to allow the new home purchase to make it all the way to deed recording (not just selecting a home, satisfactory home inspection results, etc). Too many things could happen that could hold the seller from moving out and into their new home, causing them to have to move twice to satisfy the buyer of their home the ability to settle on time.

that is asking a lot from a buyer, but in this market, it might just be want the buyer needs to agree to to get their offer accepted.

[ocngypz]

It's common here with seniors downsizing.