Watch out for pitfalls of a contingency sale

Question: Dear Kari, My husband and I just received a full price offer with a home sale contingency. Can you share any issues that this type of offer can cause us? Answer: Excellent question. A home sale contingency is one type of contingency clause in a purchase contract, which means the buyers will not have to buy your home unless they successfully sell and close the home they currently own. There usually is a time period for the buyers to sell their current home, and if they do that's great, but if not, the contract is terminated. This is a great idea if you are in the buyer's seat because you will avoid moving twice and avoid the possibility of having two home mortgages at the same time. In addition, the buyers will have the home of their choice. For the seller, this home sale contingency offer can open a big can of worms. Here are just a few: · What happens if the home inspection finds big repairs are needed? Example: Needs a new roof or has a bad foundation? · The asking price of the buyer's home may be too high and not get any offers. · What if the potential buyer gets cold feet or loses their job? · Maybe the potential buyer is turned down for the loan because they have too much debt already or bad credit. · What if the buyer's home has a bad floor plan or is on a busy street? Now we can understand that with a home sale contingency how the seller and seller's agent lose complete control. Even the buyers with the best of intentions can't predict the future on their current home sale. Therefore, what does a full price offer do for the sellers if it never makes it to the closing table? Some folks may suggest a seller to include a "kick-out clause" to provide a way of protection against a home sale contingency. This kick-out clause allows the seller to continue to market the property and accept offers from other buyers without having to sell their current home. This may sound like the perfect solution; however, the real facts are the majority of buyers and Realtors will not bother to look at a home with a "kick-out clause." Why look at a home when you might fall in love with it but not be able to buy it? Plus, there are so many other homes for sale on the market that are ready to sell. However, in some cases a home sale contingency could be a perfect solution if the seller has had trouble finding a buyer, the property is priced too high, it is an unusual home or the only offer ever received. When considering a home sale contingency contract, be wise to work closely with your agent to find out all the necessary information before signing on the dotted line. I wish you the best in your home sale. Kari McCoy owns the Kari McCoy Group, Residential Real Estate, at Lyon Real Estate. Call her at 916-933-5274 or e-mail her at sold@karimccoygroup.com. License #00841588