Buying a Home on a Contingency

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It’s always a quandary: can I buy my new home and sell my old house so that the timing of both matches? Well, yes! There are several ways to do this. Here’s a breakdown of how it can work.

Buy a Home on a Contingency.

Just what is a contingency? It’s an agreement you make with the seller that your purchase of their home is “contingent” on — or based on the successful completion of — the sale of your current home. That way, if your house doesn’t sell, you aren’t required to buy the new one.

The distinct advantage is that you get what you want, a well-timed move. But if your house doesn't sell within the given time frame, you could lose out and the house you’re looking to buy goes back on the market.

The clear disadvantage is that it's a less than stellar offer to the seller. Given two proposals to consider, the seller's urgency — not your need, determines if they accept your offer or not. Look at it from their vantage point. They know nothing about the house you're attempting to sell.

Extend the Closing — On Your Offer.

A second option is to make the offer without a contingency but ask for a longer-than-normal time to close. That allows you to sell your current house during the closing period. You'll need to rely on your agent to properly market your home and price it to sell within the time allotted. This type of option works if you don't need the funds from the sale to make the purchase or to qualify for the loan.

Extend the Closing — On Your Sale.

Another way to do this is to extend the closing on the home you’re selling. To do this, you sell your home first with an extended closing; then you find a home to buy, make an offer, and time that closing to match.

In this case, you may risk not being able to close on the new home on time, but the overlap might be small enough that you could bunk with a family member or friend.

Each of these scenarios requires careful timing with your real estate agent, mortgage brokers and the market. Before embarking on any of these plans, thoroughly discuss how it needs to work with your agent but build in some leeway in case you have a few days of uncertainty.