By Wendy Wahl and John Rives
You’ve crossed the threshold and stepped into the foyer, and you suddenly realize that you have entered your dream home. Adding to your excitement is the for sale sign on the front lawn. The perfect home is within your reach.
Most people who are considering upgrading to a newer home, or are relocating because of job or military transfer, begin their home search before they have sold their existing home. What do you do if you’ve found the perfect new home but still need to sell your existing home first? Consider making a contingent offer.
What is a Contingent Offer?
A contingency means that the buyer makes an offer, and the seller accepts the offer, but the final sale is based upon certain criteria such as the sale of an existing home. Most importantly, a contingent offer means you will not miss out on buying the home, especially in this environment of low interest rates, while you take care of selling your house.
New Home Construction
Using a contingent offer will safeguard you in the purchase of a new home that has not been built. Frequently, the builder will wait until the contingency has been satisfied prior to beginning construction. However, if the builder begins construction ahead of the contingency being met, the builder assumes all of the risks if the sale should fall through. Either way, you will have secured your neighborhood lot choice and don’t have to worry about waiting to start the process until after you sell your home.
If the builder accepts your contingent offer on a move-in ready new home, you may be in a “bumpable” position. In this case, if another buyer makes an offer on the same home for which you have made a contingent offer, you may have only 24-to-48 hours to lift the contingency or lose the house to the other buyer.
What if I’m waiting on mortgage approval or transfer orders?
In North Carolina, as of 2011, everything other than the sale of an existing house has moved from contingency criteria to “due diligence.” There is no longer a financing contingency. In addition to earnest money, a due diligence fee is paid by the buyer to the seller and a due diligence period is agreed upon. During the due diligence period the buyer, at their own expense, will conduct inspections, appraisals, document review and obtain financing and insurance for the home. If the buyer backs out of the deal before the end of the due diligence period, they will usually have their earnest money returned but the due diligence fee is the seller’s to keep. However, as long as the deal goes through, the buyer will have the due diligence fee amount credited back to them at closing.
New Home Financing
McKee Homes makes securing favorable financing easier through our preferred lenders, and when you use one of them, McKee Homes will pay the closing costs on the purchase of your new home. We have the experience and expertise to help prospective homebuyers through the entire process. Our preferred lenders have knowledge and experience with a wide array of new home financing options, and they will help you find the right mortgage to fit your needs.
McKee Homes will work with you on a contingent offer to make sure you get the home of your dreams even if you still need to sell your existing home.