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Comments and Questions:

  Selling Your Home And Buying Another - Back
When can I make a contingent sale offer?

The real estate industry has changed in so many ways in the past 30 years. There are new rules, new contracts, new disclosures; it's a whole new ballgame.

In 1977, if you wanted to sell one house and buy another, it was a piece of cake. The real estate market was active after years in a slump. Interest rates were reasonable--back then 9 percent was considered a good rate.

No one dreamt of closing a sale in less than 30 days. 45-, 60-, and even 90-day closings were commonplace. Most buyers didn't bother making their purchase contingent on the sale of their current home even though they needed to sell in order to complete the purchase. They simply negotiated a 90-day closing, which was plenty of time to get their home on the market and sold.

Now, flash forward to the early 1980's when it was nearly impossible to sell a home at all with interest rates hovering at 18 percent. It was risky to buy without a contingency to sell your home. If your home didn't sell in time, you could end up owning two homes in a down market.

Advance again to 2000, one of the best years for real estate sales ever. Homes sold quickly. So quickly, that most sellers wouldn't entertain a contingent sale offer. 90-day closings were out of the question, unless it suited the seller's needs. Home sales were closing in 14 to 21-days.

Another change has taken place: the real estate industry has matured. Deals aren't done on a handshake. Gone is the one-page purchase contract. Purchase agreements are usually 5 to 8 pages long, not including disclosures and addenda.

The particulars of how the buyer will finance the home purchase are spelled out in the contract. Most contracts include a provision stating that the buyers have the funds to close and that the purchase is not contingent on the sale of another property. Few buyers get away with making a non-contingent offer when, in fact, they need to sell their home to buy another one. A savvy seller's agent will scrutinize a prospective buyer's financial resources before advising the seller to accept the offer.

FIRST-TIME TIP: Today's real estate market may offer more opportunities for buyers who need to make contingent sale offers. The real estate market is softening in some areas and the inventory of homes for sale is increasing.

A buyer who recently transferred from the San Francisco Bay Area to Long Island remarked at the refreshing difference between the two markets. The Long Island seller willingly accepted a contingent sale offer and a 90-day close. There were a lot of homes on the market; the buyer had plenty to choose from.

When sellers are having difficulty selling, they're more apt to be receptive to contingent sale offers. If buyers are lining up for the opportunity to buy a listing, a contingent sale offer has little chance of being accepted.

From the seller's position, a contingent sale offer is risky. If your home doesn't sell, the seller is back on the market looking for another buyer. This will cost the seller time, and perhaps money if the seller has already purchased another home.

To improve the chance of having your offer accepted, increase the purchase price. And, break the sale contingency into two parts: one for the sale of your home, the other for closing. For example, your offer could be contingent on the sale of your home within 30 days and closing within 60 days.

THE CLOSING: This gives the seller an out if your home isn't sold within a month.

Dian Hymer is author of "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

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