Let’s dive into this a bit more. If a buyer places a home contingency in a contract, that means one of two things….

1. They have to sell their home (there are two options for this type of contingency in Indiana)

2. They have to close on their current home, meaning they already have a buyer on their current home.

Let’s start with option number 1.

If the buyer has to sell their home first, the Indiana contract has two options for this.

The first is a Limited Contingency. This type of contingency means that the buyer that placed an offer on your home to sell cannot purchase your home unless they sell their home first. This means they cannot be approved for 2 mortgage payments (or maybe that they don’t want to have 2 mortgage payments). The seller has the option to bump this type of contingency at any time and do a cancellation of this contract if they do accept another on their home. The seller is also allowed to actively market the property with a limited contingecy.

The 2nd type of contingency that we can receive if a buyer has a home to sell is a First Right Contingency. This type of contingency means that the buyer can purchase without selling their current home. If you were to receive another offer on the property they would have X amount of hours (whatever is filled out in the contingency) to decide if they want to remove the contingency to sell their home in order to purchase.

With both of these options, it is always my strong recommendation to have your REALTOR call the buyers lender to ensure that they are ok to proceed forward with whatever contingency they submitted. Personally, I cannot tell you how many times I have received a first right contingency and the buyer couldn’t purchase without selling, which means they should be a limited contingency. In this instance, I always counter and also let the agent know that per the direction of my seller I’ll call them (in case they are in the process of accepting something), before we would move forward with something else.

Both of these contingencies are not bad to receive, especially at higher prices or even if your house hasn’t gotten a lot of activity, there isn’t a reason to try to make a contingent offer work.

The final piece is if the buyer has filled out that they have to close on their property before purchasing yours. This means that they may need part of the finances from their sale to purchase yours. Again, this isn’t a bad thing, especially if you have not received any other offers. In this case, I would again call the other agent to see how their deal is going on the current house (are they though home inspection or appraisal?) I would also call the lender to make sure they were good on the financing side also.

In all of these situations gathering as much information as possible helps to keep you abreast of what is happening when you choose to take a contingency. Push your REALTOR (me!) to ensure that you are consistantly updated to changes that may be happening as well since there are now multiple closings in the works.

If you have any other questions, simply contact me via email to nicole@nicolemilford.com or call me at 630-251-3082!

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