The traditional home sale process involves negotiation, contracts, and meeting milestones before the buyer and seller come to the closing table.  These milestones can include financing approval for the buyer, the home inspection, gaining clear title, satisfying a home sale contingency, and more.

Let’s take a close look at the ‘home sale contingency’. This is a common, yet more complex, and not always easily understood, contingency.

What does having a home sale contingency mean?

It means that the buyer is still trying to sell their current home, has not closed on it yet, and needs time before continuing with the purchase. The buyer makes the seller a purchase offer, and the seller accepts, subject to the buyer selling their present home first. The most common home sale contingent offers are:

• The seller’s property will stay on the market, but the buyer will have a negotiable timeframe of a first-right-of-refusal notice to act on if the seller receives a better offer. The time will be agreed on in advance and can be anything from 24 hours to a few days. If the seller gets another offer, the buyer has that amount of time to remove the contingency or the seller has a right to cancel the contract and return any deposit that has been placed.
• The seller takes the property off the market and gives the buyer a time frame for selling their existing home. If the buyer has not managed to sell by the end of the allotted days, the buyer can cancel the contract, receive the deposit back and the seller will have to find another buyer.

If you are the buyer with a contingency it might be a good idea to be prepared with the financing if you don’t want to lose the home in the event of not having sold your existing home in time. 

Once contingency is removed (according to the terms agreed upon), the seller will need proof that the buyer has the funds available to close.

Contingencies of this type can get complicated, as there are expectations, and timetables to consider. I understand the intricacies involved with contingencies and guide my clients from the negotiation stage, to the closing table, and beyond.