Wednesday, June 27, 2007

Real Estate: Making an Offer to Buy a House Contingent on the Sale of Your Current One

I have a lucky client: fiscally able to carry two mortgages at once. She has her current home listed for sale with me. And she found one she loves that feels like home in a neighborhood she loves even more. So we are considering writing an offer contingent upon the sale of her home. In this particular case, the sellers, who would normally (and understandably) be skittish about doing that - taking their home off the market while they wait for a closing to occur - would get a good report from my client's mortgage lender assuring them of her ability to own two homes, even if it's a substantial period of time. Her home, my listing, is fabulous, so I am confident that someone will want to buy it. What no one can predict is how soon that will occur.

Most of us are not in the position to carry two mortgages. Most people (buyers) who make an offer contingent on the sale of their home are basically hoping their home will sell so they can buy the one they found and like. In these cases, the State of Ohio and our purchase offer process allows buyers to have essentially a 'right of first refusal' with a '48 Hour Clause.' This means, the sellers keep their homes on the market and actively show it to potential buyers. If someone else makes an offer, then the original buyers (the ones who have a contract with the sellers) have 48 hours to 'make things good' - or bow out. Some people get their ducks in a row so they can get a bridge loan if that scenario happens. Not everyone is lucky enough to qualify for a bridge loan either. Some have to bow out and then the new buyer is able to purchase the home.

Either way, sellers are skittish about this idea because one, it's not common that it works out; two, they feel like they lose time on the market. Even if it's a 48 hour clause, if the contract they are in is with buyers who definitely cannot afford the house without a bridge loan or a sudden windfall, then they tend to shy away from accepting this type of offer. Not always, but usually. It IS true, that there are many houses for buyers to pick from, and this idea may be appealing to more sellers than normal.

I would be really careful about this, do your homework with a reputable mortgage lender who can clearly advise you about a bridge loan, and who will honestly evaluate your financial situation regarding your ability to do this. Have your Realtor® advise you about the process. And try to evaluate your level of potential stress if the 'what if I own two homes' scenario comes to pass. Even a buyer like my current one, who can afford two mortgages, has to decide for themselves if this extra out of pocket money will leave them with too little cash flow if an emergency arises. I just googled this and there is an article in the Minneapolis-St. Paul Star Tribune that talks about this type of purchase offer. It's worth a read but I just realized you will have to sign up to read it and that could be annoying. So here is another article from the Seattle Times.

Peace Out - 3C

Strip Clubs and Higher Sales Taxes All In the News

Condo owners in Stonebridge, according to WKYC news tonight, came out against a proposed series of strip clubs on the east bank of the Flats. Mayor Jackson said he knew it was controversial but it was a good spot for it. The City would create a new District for it. I can't find a web link for this story but I'm sure by morning I will and will add it. (okay I found it here on

Councilman Zak Reed and the Republican party are saying they will start a petition drive to allow us to vote on the issue of a raised sales tax instead of it being handled the way Commissioner Hagan and Mr. Dimora wanted it done....well you know, like the proverbial railroad train running through our lives. Tom Beres and WKYC reported the story tonight. Hats off to Councilman Reed and the Cuyahoga County Republican Party for stepping in before it was too late. I'll give more details when they announce the specifics about the petition drive. For sure, whether you would support a sales tax increase for a Convention Center and Medical Mart or not, you should have the right to vote on it! It's your money! So take that Hagan and Dimora.

Peace Out - 3C