Contingent on the Sale of Another Home? Proceed with Caution
A reader recently asked me about making or accepting an offer that is contingent upon the buyer selling their current home. This is a situation surfaced one to two times a year when I was actively selling real estate. While it is not entirely uncommon, it is filled with potential challenges. In my experience, when a home sale contingency is involved, something almost always goes wrong. The one clause could sink your sale is the home sale contingency. Whether the buyer struggles to sell their home or gets it under contract only to face delays, the drama often outweighs the reward.
Why Home Sale Contingencies Are Risky
As a listing agent, I approach these offers with great caution. Sellers who accept this kind of offer are taking on added uncertainty. The buyer’s ability to perform depends entirely on the successful sale of their own home. That can introduce delays, price negotiations, and even failed transactions. My advice? Be very careful and ask the right questions before agreeing to such terms.
What I Do When a Seller Considers One
If a seller is open to a home sale contingency, I immediately do a few things. First, I speak directly to the agent responsible for listing the buyer’s current home. I want to know who they are, where the property is located, and how it will be priced. I request a copy of the market analysis and ensure the listing price falls within a realistic range.
Second, I make sure the buyer’s home is listed within 48 to 72 hours of contract acceptance. Every day off the market matters. It costs the seller time, money, and leverage. Third, I insist on giving the buyer a very short timeline, usually two weeks or less, to get their property under contract.
Using a Limited Time Clause for Protection
One of the best tools available in this situation is what is commonly called a limited time clause. Though the name can vary by state, the purpose is the same. This clause allows the seller to continue marketing the home even after accepting the contingent offer. If another buyer comes along and makes a better offer, the seller can accept it as a backup.
The primary buyer then gets 24 to 48 hours to either remove their contingency and show proof of financing or withdraw from the contract. If they back out, the backup buyer becomes the primary. This clause is a must in any home sale contingency agreement.
Advice for Buyers and Sellers Alike
If you are a buyer who needs to sell a home to purchase your next one, there are ways to make your offer more appealing. Work with a seasoned real estate agent who can help you time your listing properly and price it competitively. On the seller side, you need a listing agent who will protect your interests and build in the right contingencies to keep your transaction secure.
Every state has different contract language and customs, which is why it is critical to work with someone who knows your market well. If you need a trusted agent, I would be happy to connect you with someone in your area. I have an excellent network of vetted professionals across the country.
Final Thoughts
Contingencies based on a buyer needing to sell their home are always tricky. There is nothing inherently wrong with them, but the added complexity means both sides need to be strategic, informed, and protected. I always recommend clear communication, airtight contract terms, and expert guidance.
