Can We Write a Contingent Contract?

I’ve had this conversation more than a few times lately.  The question I hear is, "do we need to sell our house first before we find another home?"  The answer is likely yes unless you can unequivocably carry both mortgages for an indeterminate amount of time.  In a hot seller’s market, you had to have another home under contract or purchased before you put your home on the market.  In this more buyer oriented market, you need to sell yours first and then find a home to buy.

I’ve been talking to a young couple who have an AU Park home to sell and want to buy in the Bethesda Maryland real estate market - close in zip code of 20816.   They can’t carry both mortgages so the first home needs to be sold first.  But they’ve chosen to start their process first by identifying homes they want, thinking they can put a contingent contract on the home and then sell theirs.  It’s not working. 

Real estate transactions are complex beasts and have a lot of moving parts!  But mostly what they have in them is humans, with human emotions and human greed.  In the case above the folks thought they’d save money by working directly with the listing agent, low balling an offer and putting in a contingent contract on something that’s been on the market a while.  What they didn’t know was the back story happening behind the scenes.  There were other folks interested in the house but they just hadn’t felt any urgency to act yet.  Enter in the young couple who put in the contingent, low ball contract at just the right moment…

The listing agent did at least tell them they were not likely to get the home, but what she didn’t tell them was she immediately used that contract to prod the other buyers into action.  She knew their agent very well but gave him no indication that the offer price was low or ridiculously contingent upon a property sale.  Just that his buyers were not going to get the house unless they acted.  Immediately.

And it worked exactly as she thought it would work.  The slow to act buyers wrote a better offer than what she had in hand.  She was thrilled to have the experienced buyer agent on the other side of the transaction and his buyers are now set to close on a deal of a house.  And the young couple…  Well, they don’t have a house. 

In thinking they could do this better themselves and somehow get a deal they really just became pawns.  And they have absolutely no idea of what really happened.  I don’t fault the agent.  Not much anyway.  She was representing the seller not the buyers who made the foolish choice to spend over $850,000 with no representation. 

What should they have done?  First they need to do exactly what I told them, which is sit down with a real estate eprofessional and figure out their transactions from the beginning of the equation to the end - what they will likely net from a sale so they are aware of what they can spend.  Then get their home in quality shape so it’s a product with every chance to sell and listed for the spring market.  Have homes on their list that fit their profile so they are ready to purchase as soon as their home is solidly under contract.  That’s what they should do. 

Here’s what they will do if history bears any resemblance to the present and future:  they’ll repeat the failure and lose another house.  Perhaps then they’ll be more ready to listen to a real estate professional who understands Bethesda Maryland real estate and can get them into in the area in which they very much want to live.

To begin your search for the perfect home or to sell your home in the Bethesda Maryland area, start your journey by calling Josette Skilling at (301)385-9213.