In a perfect world, your home will sell as soon as it is on the market so that you can move on to purchasing another home. Unfortunately, this does not always happen. It is possible that you will find your dream home before you are able to sell your current home. When this happens, you can possibly work with the seller of your dream home to keep the purchase on track. To help you make the right moves, here is what you need to know.
Can a Contingency Help?
Contingencies are designed to protect a buyer in the event that something goes wrong during the home buying process. For instance, if there is a home inspection contingency and the seller fails to take action to fix issues with the home, you can back out of the purchase.
Since you have yet to sell your current home, you can ask the seller to include a bump clause in your contract. A bump clause in your contract would allow you to back out of the purchase of your dream home if you are unable to sell your current home. The deadline for selling your home could be set at anytime, but the clause usually allows for until closing day.
What Is the Drawback to the Clause?
Even though the clause can give you the time needed to sell your current home, there is one major drawback that you have to consider. The clause does not just protect you, it also protects the seller.
As part of the protection for the seller, he or she can continue to review offers for the home. If another buyer makes a bid that is acceptable to the seller, you could be bumped. In essence, you could lose out on buying the home.
It is important to note that the seller cannot just drop you from the purchase of the home. He or she has to allow you time to take moves to keep the contract alive after the other buyer makes his or her bid. You and the seller can choose the time allowed. In some instances, it could be as little as a few days or as much as a week.
What Happens to Your Earnest Money?
In the event that you are unable to sell your home or the seller accepts another bid, your earnest money should be returned. Your real estate agent and attorney will ensure that the language in your contract allows for the return of your deposit.
Before making a bid on a home, review the chances of selling your current home with your agent and explore other options for making a bid and preserving your interests in the new home.Share