If you are a Buyer and need to sell your home before you can purchase a new one, here are a few things to consider when preparing your offer.
For the Buyer, a first refusal offer is the safe way to go. The Buyer has found a home that they love and by adding the First Refusal Clause, the Seller is giving the Buyer the time they need to sell their home so that the Buyer will not own 2 homes or be homeless!
The first refusal buyer must remove all of their other conditions in order for the seller to grant the first refusal. The realtor® will insert a clause requiring the First Refusal to list their home on MLS® within 24 hours of acceptance of the offer.
The first refusal buyer must remove all of their other basic conditions (i.e. Financing, Home Inspection, etc.) in order for the seller to grant the first refusal. The realtor® will likely insert a clause requiring the First Refusal Buyer to list their home on MLS® within 24 hours of acceptance of the offer. And today, with so many options available, the Seller may even go as far as to state that the listing must offer the Buyer Agent a selling commission of 2.5%. The reasoning behind this request is that if the seller is willing to give the Buyer the time to sell their home, then the Seller wants assurance that the Buyer is being as aggressive as possible in getting the home sold. And selling through an agent gives that advantage.
If the Buyer doesn’t not want to be tied to MLS®, then the Buyer has two options.
Ask the Seller for a longer closing date. In this case the Seller will be happier, because the sale of their home will not be tied to the sale of the Buyer’s home. But the Buyer will need to get aggressive and sell their home in the time frame provided, otherwise the buyer may end up owning 2 homes. This is the less risky decision for the Buyer if they want to maintain control of selling their home. Once the Buyers’ home is sold, you can always discuss a new closing date and with mutual agreement of both the seller and the buyer, the date can be changed.
Check with your Financial Institution or Mortgage Broker during the pre-approval stage and ask about bridge Financing. If the buyer is faced with owning 2 homes, it would be best to know this up front, BEFORE, putting an offer in on a home. Each Buyer’s Financial situation if different as is each buyers aversion to RISK. This is definitely the most risky option, but it might be the only option in a multiple offer situation.
Everyone’s situation if different and everyone’s tolerance to risk is different. So discuss your options with your Real Estate Agent to get the right clauses into your Purchase and Sale Agreement!