A home sale contingency is fairly common but can be tricky. I heard a statistic that 1 in 4 homes were sold to first-time home buyers, which means most homebuyers need to sell their current home first. A home sale contingency is when you are purchasing a home, but must sell your current home first. This can be done in tandem as you purchase, and most commonly, you close both your sale and purchase the same day, with funds wired, titles transferred, and everyone walking away happy. Depending on the market, a home sale contingency may not be as big a deal and using a Realtor makes the process much smoother. Typically, if the market is in the seller’s favor, the worry of your home selling while you are purchasing isn’t as much of a concern for you as it is for the seller and the seller of your next home. If the market is in the buyer’s favor, that is when a sale contingency may be more of a concern for both parties. Right now, we are in more of a buyer’s market, so being strategic with your home sale is ideal.
There are many options to consider when listing your home, and if you are buying as well, a few more. Setting your home sale up for success starts with pricing, including understanding your competition, the home’s condition, and how it’s being marketed. What is the average days on market for a home in your area? Is the market shifting at all, and could you see any condition issues arising? Add the layer of then looking to purchase at the same time, and you need to consider how those sellers are going to look at your contingency: How it’s priced, how long it’s been on the market or if it’s even on the market, will your buyers also have a home to sell and what if you can’t sell your home? All this begs the question of whether the sellers would be willing to take on the risk of you having to sell your home and ultimately take your offer.
In a competitive buyer’s market or for a home with high interest, a contingency can disadvantage buyers. To remove the contingency and gain flexibility to buy before selling, many turn to a bridge loan, which temporarily leverages your home equity during the transition. This requires you to qualify for the current mortgage, bridge loan and new loan. Adams Bank and Trust and others, like HomeLight, offer options that allow you to use your equity and sometimes exclude your existing mortgage from your new loan qualification, reducing your debt-to-income ratio. Each program has parameters, fees and timelines for listing and selling your home.
The thought of having to sell before you can buy can be daunting, but working with a professional to navigate the process can make it much easier. If you are considering selling this Spring or Summer, consider some of these options and reach out to your Realtor of choice to help you!
Benson Verbel is a Realtor at NextHome Foundations, 2025 President of Greeley Area Realtor Association and President of the Colorado Association of Realtors Young Professional Network. Contact Benson at 970.744.0223, benson@nexthomefoundations.com or bensonhomesales.com
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