Can I Buy & Sell at the Same Time? | VailDaily.com
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Can I Buy & Sell at the Same Time?

Daily Staff Report

You have decided it is time to sell your Vail Valley home and you want to buy another Vail Valley home. How do you buy a new home and sell your old home at the same time?If you have cash – or good credit – you can make an offer that does not contain a contingency for selling your own house. On the other hand, if you have to sell your current house before you can afford to buy a new one you will need to put a contingency in the contract.A contingency is a provision included in a real estate contract which states that if something does not happen -such as obtaining financing or selling your present house – the contract that you signed is null and void. A standard contingency for selling your own house would read as follows:This contract is contingent until 9 p.m. on the __ day alter the Date of Ratification (“Deadline” upon the sale of the Purchaser’s property located at _______ (“Purchaser’s property”). If the Purchaserdoes not satisfy or remove this contingency by the Deadline, then at any time after the Deadline, but prior to the Purchaser satisfying or removing this contingency, either the Seller or the Purchaser may declare this Contract void by providing notice to the other party.Clearly, such language in a real estate sales contract will protect the Purchaser. If you cannot sell your own home by the deadline, you can get out from under the new sales contract.However, most sellers do not want the uncertainty of such a transaction. A seller – even when the real estate market is sluggish – would like to know whether they have a deal or not; will my house be sold and when?There is a compromise position which is acceptable to many sellers, namely a “kick-out” clause. Under such an arrangement, the seller accepts the buyer’s contract which contains a contingency for the sale of their own house. but adds language to the effect that if another offer is received, the first buyer will have X number of days in which to decide “to buy or walk”.Thus, the following is typical of the language which is often added to a sales contract where the buyer wants to include a contingency:The Seller may continue to offer the Property for sale and accept bona fide back-up offers to this Contract. If during the term of this contingency (the sale of Purchaser’s present property), a back-up offer is accepted, the Seller will Deliver notice to the Purchaser requiring that the contingency be satisfied or removed not later than 9 p.m. on the __ day after delivery of the notice, or this Contract will be null and void.How do Purchasers remove the contingency for the sale of their current home? There are several possibilities:if the Purchasers have been successful and already have a sales contract for the home, give a copy of that contract to the Seller, with a letter removing the contingency;if the home has not yet been sold, but the Purchasers are willing to take a chance that it will sell shortly, again present a letter to the Seller removing the contingency. However, this time the Purchasers will need to present proof that they will be able to afford the new home. Most sellers require either (1) a letter from a lender stating that financing for the new home is not contingent in any manner upon the sale and settlement of the Purchasers’ current home, or (2) that the Purchasers present evidence that they have sufficient funds in order to go to closing on the new home.A purchaser would be foolish to remove the contingency if they cannot meet either of these two requirements. Otherwise, they would either be legally required to purchase the new home without yet having sold their current residence, or they would be in breach of the new sales contract. Neither of these alternatives are desirable.Clearly, this is a dilemma for most homeowners. We want to step up to a bigger house – or move to a different neighborhood – but cannot afford to carry two houses. I cannot recommend that anyone who absolutely must sell his current house before purchasing a new one, make an offer on a new property.If you are uncertain of your financial situation, talk to your financial counselor or a mortgage lender before you sign a contract for a new property. Because sellers are reluctant in today’s market to entertain ainy contingencies -especially one for the Sale of the Purchaser’s current home – it is strongly recommended that you put your house on the market as soon as possible and test the waters.Perhaps your house will also be hot, and you will quickly obtain a sales contract. Armed with that contract, you will be in a better bargaining position with the seller of your new, potential dream house.But keep in mind that a real estate sales contract – while legally binding – is not the same as cash in the bank. There are many cases where buyers have attempted to walk away from a contract, with or without justification. If this should happen to you, while you may ultimately get a money judgment against your contract purchaser, it does not solve the problem for your seller. They. too, may consider you in breach if you are unable to comply with the terms of your sales contract.Thus, there is a clear moral to this story: no house is worth the subsequent aggravation. If you cannot afford to buy a new house right now, hold off’ until you have the financial ability to do so.Call The Kleimer Company today at (970) 845-7776 as we can answer all your real estate questions. Take a Virtual Home Tour on our website at http://www.kleirner.com to see your new Vail dream home.Vail Colorado


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