May 6, 2004

11:23 AM

So yesterday my wife — Ms. We're-Not-Moving — found a house closer to Portland that she loves. We both love it. The only offer we can make, though, is contingent upon selling our home, which we hadn't even considered until yesterday. Help! Does anyone have experience with this kind of thing? What can we do to make a contingency offer more attractive? What about bridge loans? Anyone have experience with those? I need advice on hurried real estate transactions (other than "don't do them").
posted by jdroth to (10 comments total)

Contingency offers happen all the time, consult your realtor for details. The only way to ensure they don't go with someone else is to offer more money than anyone else... enough money that having to wait an extra month for you to sell your current house is worth it.
posted by falconred at 11:32 AM on May 6, 2004

These types of deals happen all the time. Just make sure your home is priced correctly.
posted by konolia at 11:50 AM on May 6, 2004

Why, if these deals happen all the time, is everyone telling me that a contingency offer will probably be rejected?

Perhaps I'm talking to the wrong people. (As in: friends.)

I've begun all the legwork, talking to the mortgage broker, and the real estate agent, etc. so I'll know more about our situation and about contingency offers in the next couple days. My wife and I are anxious, though, because we love the house and don't want it to slip away. It's probably a bad sign that we're already emotionally involved, eh? :)

Still, I'd sure love to hear from people who've been in similar situations before, who've had to use bridge loans.
posted by jdroth at 12:08 PM on May 6, 2004

I think what they meant is that you buying a home contingent on your house selling is pretty common, so you might not have to worry. I don't have direct experience with this, but it strikes me as something that happens ALL the time when you already own a house - in order to finance your next house, you have to sell the one you live in.
posted by drobot at 12:14 PM on May 6, 2004

Right now we're in the process of selling our house to someone using a bridge loan. He originally asked for contingency but because it's the height of home buying and selling season right now, I didn't want to take it off the market and gamble on waiting for him.

So far it seems to be working out well for him, for me, and for the realtor.

Have you considered just contacting the sellers realtor and seeing how long it's been on the market, what the nibble rate has been, that kind of thing? Of course he or she is supposed to create a false sense of urgency, but you might be able to squeeze a few facts out of the hyperbole.
posted by pomegranate at 12:54 PM on May 6, 2004

pomegranate, thanks for the info.

I'm fairly certain the house was just listed in the past few days.

I have considered talking to the sellers' agent, but will wait to do so until touring the house with our agent tonight. If the sellers are in no hurry to move, they might be amenable to a contingency offer, or so I try to convince myself. From what I understand, they're an elderly couple, which to me implies time to wait.

I'm anxious about this whole mess because we've never dealt with a real estate agent, or a written offer, before. We bought our current house from the owner ten years ago. He and I just hashed things out, no problems, and both went away happy.

I want to make an offer strong enough that, even with the contingency on selling out house, it's attractive to the seller.

Is it taboo to talk to the seller directly, to ask what his circumstances are? I guess, as you say, I could try to talk to his agent (reputed to be a flashy high-volume pushy type, unfortunately) as you suggest, I guess...
posted by jdroth at 1:16 PM on May 6, 2004

I didn't want to take it off the market and gamble on waiting for him.

What pomegranate hit the nail on the head.

As a seller, your ideal potential buyer comes to you pre-approved with letter in hand, ready to go with no strings attached (their current house has a buyer, etc). This buyer isn't going to delay the process inadvertantly while they try to find financing, or someone to purchase their current home.

Talk to YOUR agent first, ask him/her what they think, and they should be able to advise. Your agent can talk to their agent professional-to-professional and find out some info. If they aren't in a real hurry to sell, you may have some wiggle room there. However, it still stands that they'd probably want a buyer who has their ducks in a row as they may have other plans/arrangements they want to fulfill. (The age of the sellers doesn't imply time to wait to me. They may have deadlines/committments to fulfill on their own as well. Perhaps they are closing on another home, or have the money from the sale earmarked for another endeavor/investment/etc.)

If they reject your contingency, your options for sweetening the deal are grounded firmly in what your personal situation is. Anything from making an offer above asking price, pick up closing costs... A few weeks ago in the Sunday Boston Globe, I read this article about buyers' letters. Which is essentially writing a letter to sellers and marketing yourselves with a personal touch to gain a competitive advantage over other potential buyers. I may even try this myself.

What happens "all the time" in my experience is the seller has a contingency of finding suitable housing. I've seen this turn into a debacle too.

Talk to your mortgage broker about the bridge loan. The rate is going to be high(er) on it, but if you are certain you can sell your current house... it could be your answer.

Good luck, I know how difficult house shopping can be, I hope you guys get the house.

disclosures: IANAR(yet), your results may vary.
posted by jerseygirl at 1:39 PM on May 6, 2004

It depends on your market. We closed last week on our new home and have partially moved in (typing this from my laptop connected by network cable to the cable modem sitting on the counter, cables and cords hanging askew all over the place). We would still be very reluctant to accept any offer on our old home that included a home sale contingency unless it were A) at or near our listing price and B) have a short (2-3 week) time span. Yesterday we accepted an offer near our bottom line price because they were pre-approved by a lender (not a mortgage broker), would close within 45 days and had no contingencies other than the standard inspections.

If you're serious about this house, get pre-approved immediately by a real lender (I was pleasantly surprised by eloan.com, as were my lawyers). Call the listing broker on the house you want and set up a time next week to see the house. Call several real-estate agents and get the minimum they think you can sell your house for within 30 days. Tell the real-estate agents that you need to sell for the cash. DON'T TELL THE REAL ESTATE AGENTS THAT YOU ARE DOING THIS TO BUY ANOTHER HOME (they'll inflate the price to get the listing and try to weasel their way in to the deal on the new home). If those numbers work, (minimum sale amount-current mortgage + new mortgage) then talk to your lender about a bridge loan or whether they'd still give you a loan if you held both properties. The answers to these questions will tell you how to move forward (if the bottom line says you can hold on to both properties for a few months some way, then don't include a contingency and make what you think is a reasonable offer, otherwise, your only hope is to offer list or better, plus a short sale contingency).

Again, I'm coming at this from the perspective of the relatively active Boston area market, so this advice may not apply at all.

Regardless of market, though based on experience, I can prognosticate that you probably won't get this house (but it's definitely worth a shot). Nevertheless, you will immediately begin to firmly believe that the home you are in is no longer adequate and that you must move.

Happy house hunting!
posted by dchase at 7:48 PM on May 6, 2004

It's probably a bad sign that we're already emotionally involved, eh? :)

Yes, yes it is. Always be prepared to walk away when looking at big ticket items. It gives you a much better place from which to negotiate, and you don't fall into the "kid-puppy" mindset where you promise to do all sorts of outrageous things to get your "puppy".

Also, it doesn't sound like you've had time to sit with a broker and figure out what the odds of selling your existing place are, and what sort, if any, profit there is in it.

anecdotally, I "fell in love" with the house before this one, and rushed the process because I was "afraid it would get away". Worst mistake I ever made. Just as an example of how bad it was, 2 weeks after we moved in, a vast section of the second floor fell into the living room. After that, I became heartless when it comes to real estate.

If you love it before you've really given it a once over, you're not as likely to catch problems that a critical buyer would find.
posted by dejah420 at 9:05 PM on May 6, 2004

I'm half-laughing, half-cringing as I read this. I just found a near-perfect house 24 hours after casually mentioning the idea of moving to a realtor friend. I think I'm putting an offer on the house tomorrow morning. Yikes!

I can concur with the above advice about not getting emotionally involved especially when it comes to bidding. The SF Bay Area has been insane for the last few months with people bidding up to 30 - 50K over asking to get houses in the proper zip code. Definitely set a price you can't go over in your head, it will help when you 'really, really want it'.

Other things you can do to soften the blow of a contingency would be to offer as painless an offer as possible. Don't request a home warranty, pay it out of pocket. Offer to have the closing term determined by the seller - it's not much but could tip the scales a bit. Offer to buy the current appliances if not included - again not much but might be just what the seller needs.

Hope that helps.
posted by jasonshellen at 12:28 AM on May 7, 2004