Buying a home in a red-hot real estate market can feel like a struggle for sure. Between low
inventory, sky-high demand and stiff competition, house hunters are faced with historically high
real estate prices. That’s where a sale contingency could come in handy when buying a house, bthey could help you secure a bigger mortgage to outbid the competition.
How sale contingencies protect homebuyers
Sale contingencies are a contract term stipulating that, as the buyer, you need to sell your
home first before you can close on your new home. No sale, no agreement.
The idea is that you’ll put the proceeds from your home sale toward your purchase. Don’t have
20% for a down payment? Not to worry, your lender could still approve your financing with this
type of contingency attached to your purchase contract.
Buying a house on a sale contingency is a long process, that’s why you need to map out a plan
to avoid any complications or surprises. Here are the steps to follow.
Step 1: Get your finances in order
The first order of business is to make sure you’re in a financial position to buy a new house. The
biggest to-do items include: ï‚· Calculate how much you can afford to spend each month. ï‚· Create a budget for your home search. ï‚· Reach out to a real estate agent to get a sense of how much you can list your current home
for. ï‚· Talk to a loan officer to see how the addition of your home equity might increase the size of
the loan they’ll extend you.
Step 2: Seek out expert assistance
ï‚· Real estate agent ï‚· Loan officer ï‚· Real estate attorney
Real estate agent
Your real estate agent will draw up your offer, give advice and serve as a go-between with you
and the seller’s listing agent. They can also help you stage and list your current home.
In many cases, you can work with the same real estate agent for both the buy and sale side of
the process. However, be careful if you use one of the many popular real estate listing sites to
set up a showing. You could be legally attached to your assigned agent for that particular
property as soon as you schedule your walkthrough.
Loan officer
Loan officers play a critical role, getting you the mortgage you need to purchase your new
home. They will send you a preapproval letter that tells sellers you’ll be able to secure financing
— as long as that sale contingency is met. Your loan officer will help you prepare all the
documents needed to process your mortgage and close on your new house.
Real estate attorney
Be sure to have a real estate attorney look over any paperwork you need to sign, including your
offer, to check that you’ve covered all of your bases. Anytime new legal documents pop up, ask
your attorney to read through them and flag any potential concerns.
Step 3: Prepare to sell your home
You want to do everything you can to make your offer more appealing. If your home is already
on the market when you submit your offer, that’ll show sellers you mean business.
Get a jump on any repairs you might need to make to close the sale on your home. Time is of
the essence, so don’t delay the closing process because of last-minute maintenance work.
Step 4: Stage your home
Follow these tried-and-true home staging tips to reel in prospective buyers
