How to Make an Offer on a House That Is Contingent With the Sale of Your House

Include a contingency in your offer if you need to sell your home first.

In any offer to purchase real estate, contingencies are usually attached that must be satisfied before the sale can take place. Some are standard, such as financing, title validity and inspection, but some, such as making the sale contingent on another, appear at the discretion of the buyer or seller. If the buyer makes an offer contingent on the sale of an existing home, it's usually harder for the seller to accept, especially if other offers are likely to come in. Nevertheless, the procedures for adding that contingency to the offer and for satisfying it are straightforward.

Instructions

1. Contact a licensed real estate agent to represent you. As the buyer's agent, it will be his responsibility to write the offer and negotiate the deal according to your best interests.

2. Add wording that ties the purchase to the sale of your existing house in the "Contingencies" section of the real estate forms. Be specific by including applicable dates and time periods. Set the proposed closing date for the offer a reasonably short period after the date the sale of your existing house closes. This period is usually automatically fixed at three days, so if you need it to be longer, you have to specify that in the offer and the seller has to agree.

3. Wait for the seller to accept your offer, decline it or propose a counter-offer. If the seller is inclined to accept your offer, you will probably receive a counter-offer with a "kick-out clause." It gives you the option to remove the contingency if the seller receives a second offer that is comparable to yours. If you don't choose to do this, the contract terminates and your earnest money is refunded.

4. List your existing home for sale within five days of the acceptance of your offer by the seller. Decline any offers that are themselves contingent on the sale of a second property or that have a closing date of less than 30 or more than 45 days unless you receive the seller's written consent for such a sale. Accepting such offers without consent may automatically terminate your agreement and cause you to forfeit your earnest money.

Tips & Warnings

• If the contract includes a kick-out clause and the seller receives a second offer, you usually have five days to decide whether to waive the contingency and proceed to closing without the sale of your existing home.

• A contingency that makes the sale of a home dependent on the sale of another lengthens the closing period to an indefinite period and is often a deal-breaker. Make sure you consider all your alternatives before you write it into the offer.

References

• AG Beat; Buyer Wants to Make an Offer Contingent on the Sale of Their Home; Patrick Flynn; June, 2010
• Robbins Realty: Home Buying Contract Contingencies