Homeless?
By Jim Palmer Jr.

As the problem with the homeless population grows in our region (and elsewhere) our thoughts are certainly sympathetic towards those who are unable to remedy their situation. For many home owners who are thinking of selling (in this market of scarce replacement properties), the thoughts of not finding a home conjures up fearful thoughts of sleeping on a cold street somewhere. That horrible imagery may be a small portion of the dynamic that has created the housing scarcity to begin with!

In past markets (that favored buyers), offers that were contingent upon selling a home first were rarely used, simply because sellers were not willing to put that sort of a cloud on property listings that already had extended market times. But in the current market, sellers are pressured to accept such offers more frequently. The majority of buyers must sell a home in order to come to the table with enough equity and are reluctant to sell and look later because they have that fear of being homeless after their property sells. This is a stressful dilemma! The saving grace to this dilemma in this market is that once a seller (who has a contingent offer on a replacement property) lists their current property, those properties usually sell quickly because of the elevated demand. Sellers such as this are motivated to liquidate their property so another buyer can’t bump them from their replacement purchase. That makes them more likely to price it competitively and use aggressive marketing techniques.

The standard contingency agreement includes a “bump” provision that basically says the seller can continue to market their property and if they receive another acceptable offer, they can give written notice to the first purchaser to remove their sale-of-home contingency or the seller can terminate the offer within a specified number of days.  That allows the seller to move on to a more reliable buyer with less waiting time.

The risk to a seller taking a contingent offer is that they can’t control the time frame or most of the contingencies in their buyer’s house sale. This means that the exact closing date cannot be determined and is a guess at best. When it turns into a 3 or 4 legged deal and the first or second leg has a hiccup such as difficult lender-required-work-items that take time to cure, the stack of dominos can fall the wrong direction.