Tag: contingent buyer

What Does Contingent Mean in Real Estate? A Complete Breakdown for Buyers and Sellers

Posted on by Will Sing

In the world of real estate, the term “contingent” can sometimes leave buyers and sellers scratching their heads. Whether you’re navigating the buying process or preparing to list your home, understanding contingent offers is crucial. In this post, we’ll break down what it means to be “contingent” in real estate, how it affects you as a buyer or seller, and what potential scenarios you could face.

What Is a Contingent Offer?

A contingent offer on a house means the buyer has included a protective clause in their contract. This contingency gives the buyer an option to back out of the purchase if certain conditions are not met. Typically, a contingent offer involves the buyer needing to sell their current home before they can finalize the purchase of a new one. Think of it as a step in between “active” and “pending”—the property is not quite under contract yet, and there’s still an opportunity for other buyers to step in.

If you’ve heard the term “bumpable buyer,” it means that the current buyer’s offer is contingent on selling their home, and another buyer could potentially “bump” them out of the contract. Essentially, it’s a state of uncertainty, and another buyer might have a chance to swoop in.

What Does Being Contingent Mean for Buyers?

For buyers, there are two key scenarios involving contingent offers:

  1. You Are the Contingent Buyer: You want to buy a home, but you need to sell your current property first. This makes your offer contingent on that sale, which can sometimes be a hurdle. If another buyer who is not contingent decides to make an offer, you will usually have 48 to 72 hours to either remove your contingency or lose the property.
  2. You Are a Competing Buyer: You want to buy a property that already has a contingent offer. In this case, you can put in an offer, which then triggers the “bump clause.” The original buyer (who is contingent) will have a set amount of time to remove their contingency—if they can, they go from “contingent” to “pending,” solidifying their contract. If they cannot, the seller is free to accept your offer, and the contingent buyer is out.

What Does Being Contingent Mean for Sellers?

If you’re selling your home and receive a contingent offer, it’s important to understand the potential risks. If the buyer needs to sell their current home, this could delay your closing timeline. For instance, if their home takes longer to sell than expected, you might need to extend the closing date, which can be problematic depending on your plans.

It’s also essential to assess the buyer’s preparedness to sell their current property. Are they already on the market? Are they prepped and ready, or are they just starting? The more ready they are, the less risk you’ll face. Given the additional uncertainty, contingent buyers often need to make a stronger offer to compensate for the risk you are taking.

Key Takeaways

  • Contingent Offers: Buyers need to meet specific conditions, often involving selling their current home.
  • Bump Clauses: If you are the contingent buyer, be prepared to act quickly if a competing offer comes in.
  • For Sellers: Contingent offers can mean more risk and longer timelines, but they might come with a higher price to compensate for that risk.

Watch the Full Video: The REAL Difference Between Contingent and Pending

If you have any questions about buying a home or need more personalized advice, feel free to reach out to me. Connect with me on YouTube, Instagram, or Facebook.

For a more detailed consultation or to get started on your home buying journey, schedule a free strategy session here. You can also access my Free Buyer’s Guide to help you through every step of the process here.

Sell A House and Buy A House at the same time!

Posted on by Living Room Realty

Let’s talk about a Sell/Buy situation, as this seems like a pretty scary endeavor at first thought, but with the right plan, tools, and people, this process can be seamless.

PLANNING

Once you’ve decided it’s time to move on to your next house adventure, but you need to sell your current house in order to pay for it, CALL YOUR AGENT, and then call your lender!! These are the first steps. The second step is easy enough – your agent will do a walkthrough in your home that you need to sell. This will be the time when you can discuss your ideal timeline, where and why you’d like to move, and your agent will provide tips to get your house sell ready. This is such an important part! Since you’ll be needing to sell to pay for your next house, the selling element is crucial. You want the most eyes seeing this dialed in, put together, clutter-free, priced right house. It needs to be easily accessible for showings, open houses, and both the inside and out needs to be looking it’s best. You’re joining the dating pool, and you need to find the new lover of this house. First impressions are EVERYTHING!

I would recommend having a list that you all, (you and your agent), can see and make adjustments to as you check off the to-do’s. Something like Trello works wonders! Do the inexpensive, but impactful things such as updating light fixtures, shampoo that carpet, add some mulch and new flowers to the garden. Need contacts, contractors, or handyfolks to help, we have the resources! Create a realistic timeline on getting all the things done, then one to two weeks to list, have another walkthrough with your agent. Planning for selling is so very important. I want to ensure my seller clients are getting the most bang for your buck in prepping their property, but also that once we “go live!” with the listing, that it sells for top dollar to some excited buyers. That brings us to…

PRICING TO SELL

How long do you have to move? Did you just find the perfect house, but you haven’t even listed yet? Did you list, but the house isn’t selling, and you really want to put an offer on your dreamhouse? The price can be the selling or sticking point in this already challenging situation. Your agent will find some comparable sold properties that have sold recently in your area with similar criteria to your house. Price too high and it sits, price just right and it sells fast. List at the right time, et voila! We like to think it’s a bit of an art.

BEGIN THE HOUSE HUNT IN EARNEST

Now that your house is listed, or about to be listed, (within a few days), the house hunt begins in earnest. Time to go house shopping, which is so exciting! Since you’ve listed your home, the chances of competing are a bit higher as a contingent offer. If you’re pending on your house, even better! However, something to consider when writing an offer while being contingent, is that it’s so important to know what that seller needs, and then deliver and then some. The terms and purchase price of your offer will be crucial to beat out the other offers that may not be contingent.

HAVE A PLAN B

As with most things in real estate, predictions can be precarious. Of course, we want everything to go seamlessly, without too many hiccups or hurdles, but sometimes things just happen. While selling your house to buy your next one, having a plan b for the just in case moments is so very important. For example, say you sell your house, but you still haven’t found the next one. A very valid concern! Consider putting your things in storage and getting a short term rental or Airbnb. Maybe a stay with some family and friends for a while until you find that dream house. Never stop the house hunt no matter how exhausting it may be. It will be worth it in the end. Knowing you have a plan b will help take the pressure off an already very much pressurized situation.

All in all, your agent – whether it’s me or someone else just as fabulous – will be your guide, therapist, planner, manager, and advocate throughout this whole endeavor. Ready to list? Want to see the ‘just listed’ and then soon after the “offer accepted” posts? I’m here to help make your dreams come true!

Janelle Freeman, Broker at Living Room Realty

Janelle Freeman, Realtor (@janelleisrealestate) | Instagram

 

 

Will My Contingent Offer be Accepted?

Posted on by Living Room Realty

This past weekend, I hosted an Open House at a well-maintained Milwaukie home. The home boasted a superb location, single story layout and thoughtful upgrades. To say there was good turnout from buyers is an understatement!

To my amazement, most of the home shoppers were looking for their next home without having sold (or listed) their current home first. When you put in an offer on a home that hinges on you successfully selling your current home, it is called a contingent offer.

The insanity that was the 2021 Portland housing market meant that buyers making contingent offers on homes were consistently turned down over non-contingent offers. With fewer moving parts and less risk for the sellers, non-contingent offers were favored in an extreme seller’s market.

Fast forward to today – there is some shifting in the market, and there’s a *small* amount of wiggle room for contingent offers. Still, it’s important to remember how crucial strong financing is in getting your offer accepted.

Seller’s agents are looking out for their clients by asking for proof of funds from buyers offering cash or large down payments and pre-approvals from lenders to minimize the risk for their sellers. If a contingent offer is accepted, they will most likely require you to list your home by a certain date (if you haven’t already), place you in “Bumpable” status (meaning the seller can accept a different offer if one comes in), and even put a deadline for when you need to accept an offer on your current home.

If you plan on making a contingent offer on your next home, I suggest you have a solid marketing plan for your current home already in place. Start working with a real estate agent now, so you can hit the ground running if your offer is accepted!

Contingent Offer in Lake Oswego

Posted on by Living Room Realty

When Deanna and Andy came to me and wanted to sell their gorgeous home in Southwest Portland to find a new home in Lake Oswego before their young son started elementary school this coming year, I was excited. Their home in Southwest went for $30k over ask and we had multiple offers within 12 hours.

Contingent in Lake Oswego

Their criteria for the new home was: weird. And by weird, they meant, architecturally unique (see above photo).

 

We ended up finding something before their house in Southwest was on the market so we wrote contingent. And our offer was accepted!

Note: an offer that’s written “contingent” means that the Buyer has to sell a property in order to buy a property. 

We were days away from listing their house when we received news that they had been “bumped”. With contingent offers (also called “bumpable”), the Sellers are still able to accept offers from other Buyers and if there’s one they like, they can “bump” the Buyer. Unfortunately for us, there were two offers, so we were moved to the second back-up position.

This tenacious duo had faith. We continued looking at other properties and put their home on the market, and like so many “weird” or architecturally significant homes, the Lake Oswego one they loved had it’s quirks, so we were eventually moved back up to first position. It was a roller coaster! But, now they had sold their house and bought an incredible home in Lake Oswego.

 

See this article from a 1976 Better Homes and Gardens. It’s truly a 70’s GEM!

One of the best rewards of this duo’s patience is that we ended up negotiating for well under ask and the house appraised well over their paid price. Timing was everything.

Interested in an architecturally significant home? Reach out.

Interested in owning a home in Lake Oswego that has an easement (like this one that has three!)? Learn more about easements here.

Want to read Andy and Deanna’s reviews, head here.

Want to Buy a House, But Need to Sell One First?

Posted on by Erika George & Kari McGee

After four long years, the Portland real estate market is now right for those homeowners who want to buy a house, but need to sell their current home as well. In real estate lingo, they’re called “contingent buyers.” If you’re considering how to sell and buy a house, we’ve outlined four options to help you make the move. We’ve helped many Portlanders sell their current home and move into their dream house.

Why is 2019 a great time for contingent buyers? The Portland real estate market has changed, and we’ve entered a balanced market for the first time in four years. That means buyers have more leverage, including contingent buyers. (We do a deep dive into 2019 buyer trends in our post Is 2019 The Right Time to Buy a House?)

Before we outline your four options, remember that the HouseLovePDX Team provides free consultations and market analysis. Don’t hesitate to give us a call and arrange a time to go over your options in person or over the phone!

 

Option 1: Shop – Buy – Sell

This is a classic contingent offer:

  1. Shop for your new dream home
  2. Make a “contingent offer” to the seller – the offer is contingent on the sale of your current house
  3. Seller accepts the offer
  4. Sell your current house
  5. Move into your new home

Sellers may be wary of contingent offers because there is more risk compared to a traditional offer. (If for whatever reason you don’t sell your current house, then the deal is off.) Some sellers won’t accept a contingent offer. In the past, sellers had more leverage than buyers in the Portland real estate market, and they tended to reject contingent offers. Happily that’s not the case in the current market.

When you’ve made a contingent offer, it’s crucial to sell your house as soon as possible. You don’t want to be sitting on the market for two or three months. Preparing ahead to sell your house will make your contingent offer as appealing as possible to sellers.

 

How to Prepare Ahead for a Contingent Offer

Preparing ahead for a contingent offer is similar to preparing to sell your house in general.

  1. Free Consultation and Market Analysis

We provide a free consultation, including a professional marketing analysis of your current property. We’ll establish your house’s price point, and how much you can expect to get in terms of your net proceeds. This will give you a price range when you’re house hunting for a new home.

  1. Recommended home improvement projects

We’ll provide a list of prioritized home improvement projects to help increase the value of your home. Not everyone can – or wants to – invest in home improvement projects. That’s not a problem! What’s important is pricing your house right to sell it after you make a contingent offer on a new home.

  1. Create Marketing Plan and Stage Photography

We will create a marketing plan and stage photography that will show your house in the best light.

When you find your new dream home and make a contingent offer, we show the seller your marketing strategy, pricing strategy and beautiful photos. This assures the seller we’re ready to sell you house, and can provide the confidence needed for a seller to accept your contingent offer.

As soon as the seller accepts your offer, we’re ready to get your house on the market within 24 to 48 hours!

 

Option 2: Sell – Shop – Buy (Or Plan B)

We call this the “Plan B Option” because you must have a plan B arranged in case you don’t sell your house in time:

  1. Sell your house
  2. Shop for your new home
  3. Either buy your new home or move temporarily into your plan B option

Plan B can be an apartment, or living with your parents or in-laws.

You’re already under contract to sell your current house, so you’re in a great position when shopping for your dream home. However, it’s important to do some research and make sure there is enough real estate inventory to choose from, i.e. other houses for sale within your price range and with the characteristics you’re looking for. You will need to shop for a new home relatively quickly.

The risk in this situation is that if you haven’t closed on your new house in time, you have to move into your plan B temporary housing.

Although it’s crucial to have a doable plan B arranged, so far we’ve always managed to get our clients into new homes before they’ve had to move to their plan B. (Moving back in with your parents seems to be a very motivating factor!)

 

Option 3: Bridge Loan

A bridge loan provides financing for a downpayment on a new house. That means you don’t need to sell your current home in order to purchase a new one. Like all loans, bridge loans are based on several factors, including your income and credit, and loan-to-value ratio. We can put you in touch with excellent loan officers who can provide detailed information on your unique circumstances. (Erika used a bridge loan to buy her last house, so she can speak from personal experience as well.)

If you qualify for a bridge loan you can:

  1. Shop for your new dream home
  2. Make an offer on a new house, financed with the bridge loan
  3. Move into your new house
  4. Prepare your old house for sale
  5. Sell your old house

The major benefit of this option is you can wait to sell your house until after you’ve moved out. You don’t need to worry about moving into temporary housing and then moving again. If moving twice is something you want to avoid (think: children, pets, home businesses, lots and lots of packing) then a bridge loan may be a great option for you.

However, from a financial point of view, you will need to be able to pay two mortgages until your sell your old house. Not everyone has to make double mortgage payments, but you need to be able to afford it for the time it takes to sell your old house. Additionally, the selling price of your old house isn’t set in stone, so there’s some financial uncertainty.

In a best case scenario, you sell your current house quickly and avoid paying double mortgage. On the other hand, you may not be able to sell your house for six months, ten months or more, depending on the market. In our free consultation and market analysis, we talk to prospective clients about what they can realistically expect. If you are considering a bridge loan, you want to be confident that your property will sell quickly.

We understand that no one wants to pay two mortgages, so we will work with you to get your house sold quickly.

 

Option 4: Sell – Rent – Buy

This is a great option for people who want total financial security and don’t mind moving twice. If you want to make sure you have the money in the bank from your house sale, and you want plenty of time to shop around for your dream home, then this is a great option for you.

This option is straightforward:

  1. Sell your current house
  2. Move into temporary housing
  3. Shop for your new dream home
  4. Buy your new house

Kari went this route when she made her last move. This option gave her time to shop for the right house. There was no rush to buy a new house quickly.

There are pros and cons to each of these options. We’re happy to discuss your specific circumstances in detail. There’s no reason to wait – it’s time to move into the right house for you and your family! Call us for a free consultation at 971-322-6612 or email us at karianderika@livingroomre.com.