Yesterday I told the story of an offer that was contingent upon the buyer selling her house. The buyer didn’t want to risk putting the condo on the market without a sure place to go.
The seller didn’t want to take his house off the market unless the buyer made a good-faith effort to sell her condo.
The answer for the seller was easy, he rejected the offer.
But what’s a buyer to do? The big fear, of course, is that the buyer will successfully sell their property and then have no place to go. The idea of having no place for the family to live is downright scary for most people.
While there is always risk in buying or selling a home, a good agent will minimize the risk to the buyer by inserting a contingency into any offers on that buyer’s home. It makes the contract contingent upon the buyer finding a house to buy.
We call it a “house of choice” contingency. It’s so standard, we even refer to it as “HOC”. It goes as follows:
“The Contract is contingent until (Deadline) to allow Seller to enter into a contract of sale to purchase another home of Seller’s election. This provision and the Contract will remain in full force and effect unless, prior to the Deadline, Seller, upon written notice to Buyer shall declare the Contract null and void.”
Voila. If the buyer can’t sell his old property by the deadline, he simply cancels the contract (or negotiates an extension on the Deadline) and ends up with nothing worse than a cleaner house and some inconvenience.
Once the buyer’s house is under contract (with that contingency firmly in place), then a seller will take a serious look at any offers the buyer may write.
So, what’s that sequence of events again?
- Homeowner puts his house on the market, noting that he will be inserting an HOC contingency (see? you’re picking up the lingo already!)
- Homeowner accepts an offer on his house and then writes an offer on the house he wishes to buy, this time putting in a contingency that his old house must go to settlement before he can settle on the new house.
- Seller of new property feels secure in taking his house off the market, knowing that the buyer’s house is already under contract and therefore the risks are greatly reduced.
It’s not perfect, of course. Contracts fall apart for many reasons, but at least no one ends up homeless.
© 2007 Susan Pruden.