What is known as a ‘home sale contingency’ in some markets is known as a ‘subject to sale contingency’ in the Iowa City real estate market. This is when buyers make an offer on a home contingent on the sale of their own home.
It’s very rare for sellers to get an offer with no contingencies. Typical contingencies are for financing and inspections. These are standard and something you should expect to see on any purchase agreement in the Iowa City area. A contingency you as a seller want to be wary of on the offer is the contingency for the sale of the buyer’s home.
What is a Contingency?
In case you’re not clear what a contingency is, a contingency is a condition of sale. The subject to sale contingency means the buyers make it a condition of the offer that they need to sell their own house before they can buy yours. Put another way. If their house doesn’t sell, neither will yours. If you accept a subject to sale contingency it effectively means you’re taking your house off the market while you wait for the buyer’s house to sell. This is risky and should only be done if you are VERY sure that the buyers house will sell quickly. The idea of continuing to show your house to potential buyers usually doesn’t work out that well. Most buyers are typically not interested in seeing homes that already have accepted offers – Regardless of what kind of contingencies they have on them.
What to Consider Before Accepting a Subject to Sale Contingency
There are a few things you need to think carefully about before accepting a subject to sale contingency.
- Price & Condition of Buyer’s House
- Where is the house located?
- How long has the buyers house been on the market?
- What are market conditions?
A good Realtor will be able to advise you if the situation warrants a closer look at an offer with a subject to sale contingency. In the majority of cases, accepting an offer with a subject to sale contingency is not recommended, unless you are VERY sure that the buyers house will sell quickly. The better plan is to tell the buyers to come back when they’re actually in a position to buy the house.
Are you looking for the right Realtor to help you navigate the complexities of the real estate market, all the while looking out for you and your money? Sound advice and guidance is just a phone call, text or email away. Call Denise now at 319-400-0268.