MLS: “An Offer Has Been Accepted Contingent Upon: Sale of Another Property”
In a non-Contingent offer — also just called a regular offer — the prospective home Buyer represents that they can perform (= pay) without first having to sell another home.
Ergo, a Contingent offer is one in which they have to sell their current home (known as “the backup property”) in order to buy.
With continued tight inventory in many housing markets (including the Twin Cities), this “buy first/sell second” strategy appeals to many Buyers.
The flip side of the coin?
It’s a turn-off for Sellers, who are exposed to greater risk and uncertainty.
Putting Buyer’s Money Where Their Mouth Is
That’s because there’s no guaranty that the backup home will sell within the prescribed amount of time — typically, 60 to 90 days.
Too, it’s possible for there to be a daisy chain of Contingent deals, in which a hiccup in any one deal triggers a domino effect of derailed deals.
Instead of Contingent offers, then, savvy Sellers often suggest a delayed closing, sometimes after setting this (sort of) trap for unwitting Buyers’ agents and their clients:
Listing agent (representing Seller): “What can you tell me about the backup house?”
Buyer’s agent: “It’s priced to sell, shows great, and everything nearby is being snapped up!”
Listing agent: “Terrific! Then it should sell fast. To give the Buyer time, the Seller will agree to a non-contingent offer that closes in [fill in the blank] months.”
Of course, if the Buyer’s agent isn’t confident the backup house will sell quickly . . . why should the Seller be??
P.S.: There are generally two ways for Buyers to tap the equity in their current home and purchase non-contingent: 1) a home equity line of credit; or 2) a bridge loan.
See also, “Why Contingent Offers Are Making a Comeback (They Are)”; “Daisy Chains, Dominoes, & Contingent Offers“; “Contingent Offers: Getting (Very) Comfortable With the “Backup Home'”; “What Asterisk Clause Offer and Contingent Offers Have in Common“; and “Why Sellers Don’t Like Contingent Offers ” & How to Overcome Their Reluctance.”
