In today’s market, inventory is tight, demand is high, and home prices continue to rise. This might seem like the perfect market for sellers, however the problem comes when those sellers have to then buy a new home.
Home prices nationwide increased by 5.7% annually in June, and increased 1.1% monthly, according to the CoreLogic HPI.
Despite the market’s competitiveness, however, sellers do have a way to ensure they will get a new home after selling theirs: a seller’s contingency, according to an article by Amy Hoak for MarketWatch.
The contingency adds a requirement to the contract stating the seller must secure a new home before finalizing the sale of their current one.
In the article, Cody Anderson, a real-estate agent with RE/Max in the Minneapolis area, details the contingency process.
From the article:
Here’s how it works: Anderson typically notes the seller’s desire for this contingency in the agent remarks of the listing. Eventually, the contingency is worded into the contract, noting the number of extra days the seller wants to find his or her next home, perhaps 30 or 45 days.
If after that time period the seller hasn’t found a place, the buyer can back out. But he or she would have the option of sticking around if still interested in the property, adhering to the seller’s timeline, he said. Turns out, there are many buyers who are fine with that stipulation, he said.
For a deal headed to the closing table soon, “the first-time home buyers didn’t even bat an eye,” Anderson said. “After a quick call with the buyer’s agent, I sent her the legal paragraph we needed in the contract. She sent the offer an hour or two later.”