Buyers Wants Sale Contingent On His Sale
Potential buyer wants his offer contingent on selling his own house before our transaction is valid. Makes sense; he doesn't want two payments, cash is tight, and he beat the competition to a good deal.
What is the very best way I can handle this? Is there something win-win I'm overlooking in the fold, or even something bold, like a slight price increase spread out over the first year, depending on my holding costs?
Alan
Taking a contingent offer like this is a good deal for the seller if the contract is worded correctly. Most offers that are contingent on the buyers selling their house read something to the effect that if the seller gets another acceptable offer, with no selling contingency, that the 1st buyers have 48 hrs (or whatever term agreed upon) to procure financing and start the closing process or forfeit their position in the deal. NOTE: if they supplied you with a deposit, that would have to be returned to them.
Roger
This is pretty common as most people cannot carry the double load and are concerned that they will buy the new home and the old home does not sell. Yip you are upside down and quick. I have used this device many times.
Lucius
Alan,
Is their a deal in the home that they are trying to SELL? Looks like a good trade to me if it makes sense.
Like others said its common but I would take a good deposit and make another step up deposit if you do give them a 1st right of refusal.
Talk to them about a Bridge Loan. A bridge loan basically lets them borrow on the equity of their old house to take care of making the payments and moving expenses while they're changing houses. With this, they can have their cake, and eat it too!
Heh yeah see if you can take the house they are trying to sell... at a profit for you of course!
Thanks for the enjoyable advice, Jam, gooseman, Vero Beach man, Roger!
Lucius, what does, "Yip you are upside down and quick." mean? You used it many times...I want to use it.
Grateful, Alan[ Edited by fearnsa on Date 04/29/2004 ]
I don't have enough details to be specific, but you could buy it from him, and add a clause that you'll rent it to him for X number of months for $X price in the event that he doesn't close.
Asuming that he's selling his primary residence and he's been there for 2+ years, he won't have to worry about cap. gains.
You get the house, he doesn't have to move yet, you've got a tenant.
Yippy a tenant!
But that still means double payments for my buyer.
The bridge loan sounds reasonable. Or spreading out 60 days holding costs over 12 months and adding it to monthly payment.
The trade, oh it could have been nice, except for the location. I'll keep that one in mind!
Excellent advice.
Thanks a lot! Alan[ Edited by fearnsa on Date 04/30/2004 ]