can a house be puchased contingent on sale of my home? (RE market, contingencies)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The scenario: We like a home in NC based on what we see on the web and from the Realtor. We want to fly back to look at it closer.
We have a home in AZ for sale that we must sell before we can buy another.
Is there a way to put a "hold" on the NC property until we see it? And if so, and we really like it, can we make an offer contingent on the sale of our AZ home?
Yes you can unless it is an REO or short sale. The bank won't accept that contingency. The seller has to agree to take the contingency as well and all areas handle them a bit different.
Talk with your agent in NC about how they do that there.
You can, but in this market, most seller's are very reluctant to take an offer contingent on selling another home. Bank sellers (bank owned homes) will not take such an offer. Most sellers will require a specific time frame for you to sell or else they can accept another offer and cancel yours.
As far as a "hold", you could also make an offer contingent on viewing the property. If I were a seller, I'd ask for a non-refundable deposit.
The scenario: We like a home in NC based on what we see on the web and from the Realtor. We want to fly back to look at it closer. Buy a couple plane tickets and go take a look, hopefully you are familiar with the area; meaning you have done at least some research online or know people who live there?
We have a home in AZ for sale that we must sell before we can buy another. Good luck; be prepared to have one of the cleanest/pristine properties in the area and price it about 2to 5% below market value otherwise your palns to move to NC will be on hold for a while.
Is there a way to put a "hold" on the NC property until we see it? And if so, and we really like it, can we make an offer contingent on the sale of our AZ home? Yes; you would have your realtor in NC write up a contract to purchase the home, be prepared to deposit some earnest money (probably 1% of the purchase price) into escrow/title. As part of the contract that you submit to the seller of the home you will have a contingency addendum; this basically states that you will have to receive the proceeds from the sale of your home in AZ by a certain date to consumate the new sale in NC, no proceeds by that date then the contract terminates and you get you EM back.
A note about this; as the other poster made mention to already; this will not work if the property you are looking at in NC is a short sale or foreclosure as banks will not entertain contingencies.
Also; a traditional seller/homeowner will also not be very excited about entering into such an agreement either considering the RE market in AZ is not exactly on fire these days. If I'm the listing agent for the house in NC I counsel my sellers to decline such an offer unltil you at least have a deal on your AZ house, meaning you have an accepted offer that is in the process of closing. Otherwise I'm merely tying up my property for nothing other than a pipe dream, not good business for me.
Lake Conroe brings up a good point. I had some clients set to fly up from AZ to look at houses up here and suggested they talk with a local agent since their house was not on the market. They thought their home was worth more than it was. They aren't going to move.
Do you know about how much your house is worth in AZ?
You can, but in most cases, the seller will have the option to bump out your offer should something else come along. It does not even have to be for more money.
Basically you cannot 100% count on completing the sale, even if you do sale your home, as the seller really will hold the options in a deal like this. Unless he is really dumb.
Usually a clause for a 48-72 hour response by you is in the contract, should the seller receive another offer he wants to take.
Thank you ALL for so many honest, fast, and helpful replies! My goodness, I like this forum!
Silverfall: homes here are all over the map. The market is ridiculous in that we have more foreclosures and short sales than almost anywhere else. The house is "worth" what we can get for it, but the range should be in the $350K to $375K range.
Our Realtor suggested we start the listing a little high (not TOO high) so that people can "talk us down." We are listing at $394,900 to start and hoping for $375,000 - which is $75,000 less than we listed about 18 months ago. Our Realtor actually suggested that we might think about something just over $400K to start, but we want people searching UP TO $400K to see ours since we will definitely sell below that.
The Full Cash Value (FCV) on our current Property Tax assessment is $376,700 so we think $375K is the best we will do. Based on comps - and we have only 1 in the last 3 months that is a custom home comp like ours, we can expect to get around $355K- which is 10% below our initial listing price and 5% below our FCV.. I will take that this time, having learned from last time. Offers below $355K will get plugged into my spreadsheet to see if we can make them work.
Conroe: Yes, we are familiar with the area. We have friends in Lenoir and other friends in Asheville. We will definitely fly out if it looks like the trip will be worth it. It would be pointless to fly out to look at a home we can't hold or that might not be there when we sell here.
Our home is unique - we designed it and had it built so there is none exactly like it anywhere. It is "small" (2711 SF) in an exclusive neighborhood of million dollar mansions. We are the sole owners. It is clean, freshly painted, mature landscape, 6 fruit trees and a dozen other trees, and will have great curb appeal when the roses bloom (soon). It has location, location, location too. And the schools are consistently rated among the top 3 in the state - the HS having been #1 7 of the last 10 years.
The home we like in Sherwood Forest (Dunn Rock) NC is not a short sale or foreclosure. It is a new home but has been on the market over 430 days. (Why? We don't know and are asking our Realtor to check - it looks awesome). With that long a "no sale" time, the owners might be more willing to "lock down" a potential sale if they know we are highly motivated to move.
[quote=GuyFriendly;11510503]Thank you ALL for so many honest, fast, and helpful replies! My goodness, I like this forum!
Our Realtor suggested we start the listing a little high (not TOO high) so that people can "talk us down." We are listing at $394,900 to start and hoping for $375,000 - which is $75,000 less than we listed about 18 months ago. Our Realtor actually suggested that we might think about something just over $400K to start, but we want people searching UP TO $400K to see ours since we will definitely sell below that.
You are absolutely right about the house being worth what someone is willing to pay, couldn't have said it better.
This strategy of pricing high, or just above market value to "test the market" or give yourself room to come down rarely works in my opinion.
The reason it doesn't work is because you don't get the necessary foot traffic through the front door to begin with; no foot traffic means no offers, no offers equals no chance of a sale.
You are in direct competition with numerous shorts and foreclosures right now; those active listings are creating immense pressures on your property from a pricing stand point.
We all know that most buyers these days want to club sellers over the head on price, add to that if you have 300 active listings within a geographic area and only 40 "active" buyers looking to purchase in that same area..., well hopefully you get the picture.
Lets say that market value for your home is 375K for sake of argument; if your property is staged nice and in good condition why not price it at 365K to get a bunch of foot raffic through the door to create offers? Once you have an offer the people looking to buy it have alredy fallen in love with the place, not to mention they already know its a "deal". At that point you dig your heels in on price and get the deal, off to NC you go.
The alternative is you price high at 399K to "test the market", or "give yourself room to negotiate down" and you get no showings. In a couple of months, say in Feburary you then lower your price to 375K, only problem is the market is still going on a downhill train so your property is only worht 350K now. Its called chasing the market down, lots of folks do it, they're always one step above market value so their properties sit out there with the other 300 while the ones that are priced right get the deals.
This strategy of pricing high, or just above market value to "test the market" or give yourself room to come down rarely works in my opinion.
The reason it doesn't work is because you don't get the necessary foot traffic through the front door to begin with; no foot traffic means no offers, no offers equals no chance of a sale.
You are in direct competition with numerous shorts and foreclosures right now; those active listings are creating immense pressures on your property from a pricing stand point.
We all know that most buyers these days want to club sellers over the head on price, add to that if you have 300 active listings within a geographic area and only 40 "active" buyers looking to purchase in that same area..., well hopefully you get the picture.
Lets say that market value for your home is 375K for sake of argument; if your property is staged nice and in good condition why not price it at 365K to get a bunch of foot raffic through the door to create offers? Once you have an offer the people looking to buy it have alredy fallen in love with the place, not to mention they already know its a "deal". At that point you dig your heels in on price and get the deal, off to NC you go.
The alternative is you price high at 399K to "test the market", or "give yourself room to negotiate down" and you get no showings. In a couple of months, say in Feburary you then lower your price to 375K, only problem is the market is still going on a downhill train so your property is only worht 350K now. Its called chasing the market down, lots of folks do it, they're always one step above market value so their properties sit out there with the other 300 while the ones that are priced right get the deals.
Thanks again for the great input.
My biggest fear in putting down $365K is that people will see that and then want to replace carpet, tile, AC units or whatever tweaks their fancy to make it "perfect" for them. We ran into that before. I though most buyers expected to pay up to 10% below listing? Then a $365K would only net about $310K - too low for us to accept.
OTOH, what you say makes sense. Last time, we got a lot of traffic - like I said, we have a unique home in a great neighborhood and great location. There is no guarantee we will get that traffic this time - every time is different. Last time we priced high and we DID chase the market down and never caught it, cut after cut.
My Realtor did tell me that setting a price and refusing to budge is worse than setting the price too high and coming down.
The real question, then, seems to be "where do we start?"
I will think on this some more. Thanks again - you are very helpful but I can only click on your name once, it seems.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
