As the Spring approaches and the government “kick start” to the economy and the housing market starts to sink into our collective consciousness, there are more than a few home owners that want to take advantage of the low home prices coupled with the low mortgage rates.  This is to be expected.  After all, if you’re living in a town home or condo and you want to “move up” even if it’s only because you want a yard or you need an extra bedroom for a growing family, you may look at current market conditions and say, “Now is the time!”

This presents both great opportunity and great challenge.

On the one hand, it is very encouraging that credit worthy, financially qualified home owners are seriously thinking about selling their own home to purchase another home.  It means that, perhaps, we have reached a point where a lot of people think we have reached a “bottom”.  That’s always a good thing.  On the other hand, it creates a huge challenge because most people who own a home cannot carry two mortgages.  This means they absolutely must sell the home they live in prior to going to settlement on the home they want to purchase.

This scenario used to be commonplace.  Back in the day, both home sellers and home buyers knew that in order for the orderly transfer of real estate to take place there needed to be a “home sale contingency” written into the contract of sale.  What this meant is that the home seller would agree to wait until the home buyer sold their existing home in order to get the money they needed for a down payment and other costs associated with purchasing a home.  Back in the day, this waiting period really wasn’t that long or, if it was, home sellers and home buyers knew that it was important to be flexible and to work with one another to achieve their common goals.

Things Have Changed

Nowadays, it’s a different story.  Home sales take a lot longer.  Home Seller #1 may not want to take the chance on waiting a month or two or three.  Financing has also changed.  It used to be that there were a few reputable banks that provided mortgages.  Now, there is a boatload of do-it-yourself mortgage brokers that may or may not be able to “get the deal done” and what used to be a sure bet may fall apart at the last minute leaving everybody n the process hanging in the wind.

The other part of this is the huge glut of shot sales and bank-owned foreclosures that are crowding the market.  First-time home buyers are scooping up these bargains and paying less attention to homes that have “real people” in them who are eager to sell so they can move into their next home. That means that unless a home seller can price his home very competitively it may take a good long while to sell.  If you’re Home Seller #1 you may not want to wait the length of time Home Seller #2 needs in order to sell their home to buy yours.

It’s a real balancing act and coordination challenge.  It’s really like a line of dominoes all lined up.  They all have to be in just the right position and fall at the same time for everything to work properly.

It’s Not Impossible, It Can Be Done

The thing to remember is that the home sale contingency is a good tool to use in the sale and purchase of real estate.  It takes the understanding, patience and persistence of all the home sellers and home buyers involved in the process.  It is important to remember that the people involved in the process are:

• financially qualified and
• highly motivated to make the home sale/purchase work.

If the home seller, home buyer and their respective Realtors stay in communication with one another and remember that the goal is to make the process as smooth and stress free as possible, a home sale contingency can work just fine.

After all, if a home seller keeps his home on the market waiting for the perfect “non-contingent” buyer it may take just as long, if not longer, than a purchase with the home sale contingency.

Food for thought.