Buying a home while simultaneously selling another presents a challenge. Depending on the timing, you could find yourself paying two mortgages at the same time — unless a home sale contingency allows you to link one deal to the other. Learn what these contingencies are and whether sellers will accept them.
Finding your dream home before you’ve sold your current one can put you in a bind. You might feel compelled to make an offer on the new property while hoping a buyer turns up quickly for your existing home. If the timing doesn’t line up, you might be responsible for two mortgage payments each month: one on the home you’re trying to sell and a second on the home you just purchased. This can significantly strain your finances, especially if it takes several months to sell your current home.
A home sale contingency could offer a solution. In a contingency sale, you stipulate that you will not close on your new home until you close on the sale of your current home. The contingency might also specify a time frame for the sale of your home, or it might state that you can cancel the purchase contract on your new home without losing your earnest money deposit.
However, not all sellers will accept a home sale contingency. Many would rather close on a clean sale rather than wait to see whether you can find a buyer for your current home.
Much depends on the market. In a slower market — or when the seller’s own home has sat unsold for several months — sellers tend to be more open to a contingency sale. But in a high-demand market where homes sell quickly, you might struggle to find any seller willing to agree to one.
You can improve your odds by sweetening the offer, giving yourself a shorter window to sell your home or dropping your request for an earnest money refund.
If you’re committed to buying a specific property and its sellers won’t budge, you might have to close on your purchase before selling your existing home — even if that decision comes with some financial pain.