Putting offer in house, seller wants contigency on purchase

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squirm
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Putting offer in house, seller wants contigency on purchase

Post by squirm »

I want to put in offer on a house, the seller wants a contingency of purchase. I don't think I'll have a problem with that, as long as I have my own contingencies such as "void if I put in an offer on another house".

Is there any other contingencies I should consider? Also, what about the interest rate for the loan? That isn't locked in until the contract is completed, correct? What if rates go up? How do I protect myself there?
Saving$
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Re: Putting offer in house, seller wants contigency on purch

Post by Saving$ »

Are you working with a Realtor? Most realtor forms have a space for your offer to be contingent upon a loan of x at a rate of no more than y. IF you can't qualify for that, then they can't hold you to the contract.
jegallup
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Re: Putting offer in house, seller wants contigency on purch

Post by jegallup »

Many people put an inspection contingency in an offer. That way if the inspector (whom you pay) finds some disqualifying fault, you can back out or negotiate a better price. This has worked well for me on more than one occasion.
avalpert
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Re: Putting offer in house, seller wants contigency on purch

Post by avalpert »

Good luck finding a seller that is willing to take you up on that contingency.

Some common ones that you can actually use would be contingencies on qualifying for a certain mortgage, selling your own home (if you have one) and the outcome of a home inspection - of course sellers are free to reject those too, it is a negotiation after all.
bberris
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Re: Putting offer in house, seller wants contigency on purch

Post by bberris »

avalpert wrote:Good luck finding a seller that is willing to take you up on that contingency.

Some common ones that you can actually use would be contingencies on qualifying for a certain mortgage, selling your own home (if you have one) and the outcome of a home inspection - of course sellers are free to reject those too, it is a negotiation after all.
I think he means that the seller wants to buy another house before he agrees to close on the sale. That contingency is the equivalent of "agreement is void if I put in an offer on another house". I agree no one would actually agree to that contingency, but neither should anyone agree to the seller's request.
stan1
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Re: Putting offer in house, seller wants contigency on purch

Post by stan1 »

What contingency does the seller want to place on the house? Contingent upon them not getting an offer from someone else to buy at a higher price? Changing their mind about the sale for personal reasons? You should definitely insist they cover all of your costs if they exercise an option to cancel the sale (or not agree to it in the first place).
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avalpert
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Re: Putting offer in house, seller wants contigency on purch

Post by avalpert »

bberris wrote:
avalpert wrote:Good luck finding a seller that is willing to take you up on that contingency.

Some common ones that you can actually use would be contingencies on qualifying for a certain mortgage, selling your own home (if you have one) and the outcome of a home inspection - of course sellers are free to reject those too, it is a negotiation after all.
I think he means that the seller wants to buy another house before he agrees to close on the sale. That contingency is the equivalent of "agreement is void if I put in an offer on another house". I agree no one would actually agree to that contingency, but neither should anyone agree to the seller's request.
No, if the contingency is on the seller purchasing another house that is the equivalent of a buyer making the purchase contingent on them selling their house - which isn't uncommon. On the other hand, the equivalent of his suggestion of 'void if I put in an offer on another house' is 'void if someone else puts in a higher offer on this house' which of course no buyer should take.
livesoft
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Re: Putting offer in house, seller wants contigency on purch

Post by livesoft »

Everything is negotiable. You can ask for any contingencies you want. You don't have to agree to any contingencies the seller wants. You don't have to do a deal either. Just because it isn't common or isn't done is no reason to not ask or offer.
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Topic Author
squirm
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Re: Putting offer in house, seller wants contigency on purch

Post by squirm »

Hi guys, sorry, I should have been more specific. The SELLER is requesting the contingency.
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patriciamgr2
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Re: Putting offer in house, seller wants contigency on purch

Post by patriciamgr2 »

You may have more success if you provide that your offer can be cancelled by you after a certain amount of time has passed without the Seller satisfying the contingency of their purchase of a new home. You should be able to prevent them from accepting a different offer as well; otherwise, they'll just use your contract as a stalking horse to tease out higher bids. Are they actually under contract on a new home?

Unless you're in the mother of all Seller's markets, or you're getting a stupid low price, I'd also insist on liquidated damages to cover your expenses (home inspector, termite, etc). & to compensate you for your rate lock costs. The damages would be payable if they fail to meet the contingency within the period specified. You'll want to provide for a right to re-inspect closer to the actual closing--because a lot can change in several months. Unless you're paying cash, you also need to focus on how your financing is structured in relation to the contract price of the house (e.g. how long is your rate cap good for/ does purchase price decrease if mortgage rates increase while you're waiting, etc.)

I personally would not agree to what the Seller is requesting. If I was truly desperate to get the house, I'd instead offer a flexible rental scheme post-closing at a daily rate high enough to motivate them to move but low enough to ease their worries about having to move twice. I've done this when buying from a couple that was building a new home & frightened that they'd either own 2 homes (if they waited until they moved to sell the old one) or be homeless (if the inevitable builder delays occur).

Generally speaking, in my experience, what Seller is asking for is not standard practice, so you may encounter other loony behavior as your deal moves forward. Are you sure you need this particular house??? What does your realtor say? good luck
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