House Buying Avice

OkieFlyer

OkieFlyer

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Joined
May 16, 2011
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3,225
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Lindsay, OK
Display Name
Display name:
Andrew L.
My wife and I found a house that we really would like to buy if we can. Bought our small cheap starter home about a decade ago, and now it's time to get outta here. The new home will be a huge upgrade and roughly 2.5 times the value of our current home. We don't have the cash to make a 20% down payment, and we need to sell our current home to do so. We're considering making an offer contingent upon the sale of our house, but I don't know if sellers go for that kind of thing much. I realize it's far from ideal for the seller to do that, but I know it is sometimes done that way. I suppose my question is how should I approach this with the seller so that it might be more attractive for him? Earnest money? How much? Should I offer the seller an easy way out of the contingency agreement if they get another offer, like a kick out clause? What is an appropriate length of time to ask for?

I know the house has been on the market for while, and the owner doesn't seem like he's in a great hurry to sell. He doesn't even have a plan for what he'll do after the sale, so I'm hoping that giving us a little time to sell ours will give him some time to figure out where he's going to move to.

I do think I can buy the house without the contingency, but it will involve a home equity line of credit and borrowing some money from my parents, which I would prefer not to do if I don't have to.

What say you?

P.S. It's for sale by owner. No realtor involved.
 
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If you really want it, buy and sell yours. No one who really wants to sell is going to play around with a contingency.
 
You can still be represented by a realtor if you'd like. But, here's what I'd do beings its for sale by the owner. Consult with a real estate attorney, have them draw up your offer, and then make your offer.
 
sell yours, shack up with friends/family/local crack house until you purchase whatever other house you end up buying.
 
eman1200 said:
sell yours, shack up with friends/family/local crack house until you purchase whatever other house you end up buying.
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Easier said than done with a family of 5, my friend. Could rent for a while though.
 
OkieFlyer said:
Easier said than done with a family of 5, my friend. Could rent for a while though.
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that's what my boss just did, had a short term rental while he sold one and bought another.
 
Clip4 said:
If you really want it, buy and sell yours. No one who really wants to sell is going to play around with a contingency.
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Well, it doesn't hurt to try.

mscard88 said:
You can still be represented by a realtor if you'd like. But, here's what I'd do beings its for sale by the owner. Consult with a real estate attorney, have them draw up your offer, and then make your offer.
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Nah, I'm not messing with realtors or attorneys unless it becomes really necessary. Owner sales are still preferred and dominant in my neck of the woods. I'll go with that first, and see what happens. I have drawn up an agreement already. Just putting the finishing touches on it before I present it in about 1 hour.
 
I recently bought a house before selling the one we were living in. I was prepared to pay two mortgages for a few months. It stretched into 17 months and two realtors. THAT was enjoyable.

If the seller does not have "plans", it may work to your advantage to offer a contingency deal. Gives them a little breathing room to decide their future as well. Contingency offers are made all the time. Try it. All they can do is say no.
 
The biggest difficulty with contingencies is you’re asking him to up and move on your schedule whenever it happens.

You can always ask, but most folks who aren’t in a hurry to sell also aren’t going to want to be rushed out of the house on your timeframe.

We moved a number of times when I was a kid and had a couple of changes of house where there was a month or two gap from sale of previous house to occupancy of the next.

Folks just made it an “adventure” and us three kids were fine. It’s the adults that freak out. :) They put us to work sorting and tossing and schlepping our own crap, which is at least some free labor.

Be careful going up in house fiscally of course. Keep it well below your pay and as short a mortgage as you can stand on it so you can pay the damn thing off and get on with your life.

Unsolicited advice, not your question:

The math doesn’t cut anyone any breaks and 30 year mortgages are mostly interest to some banker so he can buy a bigger boat, and very little principal is paid in the US average of seven years before someone moves. They’re literally designed to be interest rentals that you pay the maintenance on.

25% of gross income, 15 year term, or it’ll be a curse and not a blessing. The bill on the smaller “starter” house will look awesome compared to the bills when stuff starts to break on a bigger one with a bigger mortgage payment if you’re not disciplined about keeping it well below what you bring in.
 
OkieFlyer said:
My wife and I found a house that we really would like to buy if we can. Bought our small cheap starter home about a decade ago, and now it's time to get outta here. The new home will be a huge upgrade and roughly 2.5 times the value of our current home. We don't have the cash to make a 20% down payment, and we need to sell our current home to do so. We're considering making an offer contingent upon the sale of our house, but I don't know if sellers go for that kind of thing much. I realize it's far from ideal for the seller to do that, but I know it is sometimes done that way. I suppose my question is how should I approach this with the seller so that it might be more attractive for him? Earnest money? How much? Should I offer the seller an easy way out of the contingency agreement if they get another offer, like a kick out clause? What is an appropriate length of time to ask for?

I know the house has been on the market for while, and the owner doesn't seem like he's in a great hurry to sell. He doesn't even have a plan for what he'll do after the sale, so I'm hoping that giving us a little time to sell ours will give him some time to figure out where he's going to move to.

I do think I can buy the house without the contingency, but it will involve a home equity line of credit and borrowing some money from my parents, which I would prefer not to do if I don't have to.

What say you?

P.S. It's for sale by owner. No realtor involved.
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Purchase offers, with a contingency to sell yours is one of the most common types of real estate sales. The worst that can happen is that they find another buyer and you have a set time (eg: 48 hours) to either remove the contingency or forfeit the contract, in which case you get your earnest money back.
 
Ken Ibold said:
I recently bought a house before selling the one we were living in. I was prepared to pay two mortgages for a few months. It stretched into 17 months and two realtors. THAT was enjoyable.

If the seller does not have "plans", it may work to your advantage to offer a contingency deal. Gives them a little breathing room to decide their future as well. Contingency offers are made all the time. Try it. All they can do is say no.
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That's pretty much my line of thinking as well. What can it hurt? If they say no, then we can pursue other means of buying or let it go. This house came up for sale before we were really prepared to sell. Now I'm in overdrive trying to get all the little thing done on my house that need doing before going on the market. The "right" house doesn't come up for sale often out here in the boonies. I'm willing to cross my fingers and just hope he'll go for it.
 
denverpilot said:
The biggest difficulty with contingencies is you’re asking him to up and move on your schedule whenever it happens.

You can always ask, but most folks who aren’t in a hurry to sell also aren’t going to want to be rushed out of the house on your timeframe.

We moved a number of times when I was a kid and had a couple of changes of house where there was a month or two gap from sale of previous house to occupancy of the next.

Folks just made it an “adventure” and us three kids were fine. It’s the adults that freak out. :) They put us to work sorting and tossing and schlepping our own crap, which is at least some free labor.

Be careful going up in house fiscally of course. Keep it well below your pay and as short a mortgage as you can stand on it so you can pay the damn thing off and get on with your life.

Unsolicited advice, not your question:

The math doesn’t cut anyone any breaks and 30 year mortgages are mostly interest to some banker so he can buy a bigger boat, and very little principal is paid in the US average of seven years before someone moves. They’re literally designed to be interest rentals that you pay the maintenance on.

25% of gross income, 15 year term, or it’ll be a curse and not a blessing. The bill on the smaller “starter” house will look awesome compared to the bills when stuff starts to break on a bigger one with a bigger mortgage payment if you’re not disciplined about keeping it well below what you bring in.
Click to expand...

That kind of doesn't make sense to me, Nate. I'd be giving them more time to get out than they would have otherwise. If I make the offer to buy today, They'll likely have 30-40 days to get out by closing. If we do a contingency, they can start planning now and they'll have whatever time it takes to sell mine plus the 30-40 days to close. That seems preferable for someone without a plan of where they're going to go.

Not terribly worried about stuff breaking. I gutted my current house to the studs and insulated,took out walls, added walls, re-wired, drywalled and textured,painted, tiled, plumbed, added central HVAC, built kitchen cabinets from scratch, all with these two hands, cash money, and a lot of time and sweat. A 40 year newer house that is move in ready can't throw anything at me that I'm not prepared to deal with. I'm not looking forward to doubling my mortgage, but we are talking about a $170,000 home and not a half million dollar one. That's probably a laugh to some folks, but it's a lot of money to me, so you do have a point there. Bottom line is, we bought a tiny two bedroom home when we first got married, and even though we have added on a room, it's still awfully small for my family of 5. Also, I'm going to start contemplating suicide if I have to spend one more year living in town. I don't know how people do it!
 
JOhnH said:
Purchase offers, with a contingency to sell yours is one of the most common types of real estate sales. The worst that can happen is that they find another buyer and you have a set time (eg: 48 hours) to either remove the contingency or forfeit the contract, in which case you get your earnest money back.
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Thanks. Is 48 hours the appropriate time to forfeit or remove the contingency? I was thinking more like a week, lol.
 
OkieFlyer said:
That kind of doesn't make sense to me, Nate. I'd be giving them more time to get out than they would have otherwise. If I make the offer to buy today, They'll likely have 30-40 days to get out by closing. If we do a contingency, they can start planning now and they'll have whatever time it takes to sell mine plus the 30-40 days to close. That seems preferable for someone without a plan of where they're going to go.
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They don’t know (nor do you) when your house will actually sell. That’s all I was saying.

See story about a 17 month nightmare above.

All you can do is ask. They might put a limit on how long they’d hold it on the contingency. Normal negotiation stuff.

We had multiple offers on our old house when we moved, like everything in Denver, since it’s been a seller’s market for a long time. We didn’t take the contingency, we took the solidly financed with a letter from their lender that it was a done deal, offer. Their real estate agent was the buyer’s mom, and she knew to go get that letter.

The contingency offer did try to counter offer with a slightly higher price but didn’t have anything in writing that they could pay that since their lender would have wanted another appraisal of the house to make sure they weren’t over-lending.

It was the old “maybe make a little more money, maybe have this go into an appraisal mess” vs “this other deal is in writing and done unless they find something seriously wrong with the house on inspection”. We went the solid route. Our agent left that decision up to us.

Just giving you the perspective of the seller. Some sellers want maximum dollars and will wait on a contingency offer at a higher price for their slightly higher risk/possible headaches.
 
Keep your current house and rent it out and use the equity in it to pay for your 20%?? Then let them pay for your old house, down payment, and part of new house. yeah you have to maintain 2 houses but barring something catastrophic its not that hard to do if you can do most things yourself.

Are you a veteran? the down pyament is waived with a VA loan.

We recently built a house and thought we would sell our old house. We ended up paying 2 mortgages for over a year and I fixed up the old house and now have a renter in it.
 
simtech said:
Keep your current house and rent it out and use the equity in it to pay for your 20%?? Then let them pay for your old house, down payment, and part of new house. yeah you have to maintain 2 houses but barring something catastrophic its not that hard to do if you can do most things yourself.

Are you a veteran? the down pyament is waived with a VA loan.

We recently built a house and thought we would sell our old house. We ended up paying 2 mortgages for over a year and I fixed up the old house and now have a renter in it.
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That's what we really wanted to do initially, however, it was going to be pretty difficult for us to pull off. No, I'm not a veteran. Good thought.
 
Can you sell your plane to buy the house/meet the 20% down? Not ideal, but it could work.
 
denverpilot said:
They don’t know (nor do you) when your house will actually sell. That’s all I was saying.

See story about a 17 month nightmare above.

All you can do is ask. They might put a limit on how long they’d hold it on the contingency. Normal negotiation stuff.

We had multiple offers on our old house when we moved, like everything in Denver, since it’s been a seller’s market for a long time. We didn’t take the contingency, we took the solidly financed with a letter from their lender that it was a done deal, offer. Their real estate agent was the buyer’s mom, and she knew to go get that letter.

The contingency offer did try to counter offer with a slightly higher price but didn’t have anything in writing that they could pay that since their lender would have wanted another appraisal of the house to make sure they weren’t over-lending.

It was the old “maybe make a little more money, maybe have this go into an appraisal mess” vs “this other deal is in writing and done unless they find something seriously wrong with the house on inspection”. We went the solid route. Our agent left that decision up to us.

Just giving you the perspective of the seller. Some sellers want maximum dollars and will wait on a contingency offer at a higher price for their slightly higher risk/possible headaches.
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I hear ya, Nate. I would not propose an open ended contingency. I was planning on asking for 3-4 months tops, at which point the agreement would be null and void, or extended at the sellers discretion, and in writing.

Fortunately though, this is still handshake country for the most part. I can't say I've ever bought or sold anything with anything more than a had written contract or bill of sale and a handshake, lol.
 
skier said:
Can you sell your plane to buy the house/meet the 20% down? Not ideal, but it could work.
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The thought has crossed my mind. That wouldn't quite cover it considering what I still owe on it, but it would be close with what cash I have on hand. Last resort.....I repeat.....last resort!!! :D
 
Wait...ask about seller financing. Also, maybe he wants to stay in area but downsize; maybe he's your buyer.
 
SkyHog said:
I’ve never had a seller balk at a contingency
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I think that depends on the market, and the seller. When I sold my Colorado house, I had multiple offers. I went with the buyers who were pre-approved and wanted a 3-week close. Someone else wanted a 4-month close...
 
Good luck, Okie. Hopefully since it’s been on the market for a bit the seller might be willing to give you a deal, especially if reasonable offers have been scarce out in your neck of the woods.


Sent from my iPhone using Tapatalk
 
This may be one of those times that a realtor could be helpful. About 25 years ago I bought my present house while owning my first house. The new house needed a lot of work so we wanted to keep our house for six months or so. The selling realtor got me in touch with a loan broker. I got a variable rate 30 year loan with no prepayment penalty and a minimal down payment and no closing cost. The interest rate was higher than other loans and I had to pay mortgage insurance. I sold my old house less than six months later and refinanced the loan into a 15 year fixed rate loan and got rid of the mortgage insurance. It took a little guidance from the loan breaker and I did have a few hundred in fees - but I got to keep my house while remodeling the new one. Good luck.
 
OkieFlyer said:
My wife and I found a house that we really would like to buy if we can. Bought our small cheap starter home about a decade ago, and now it's time to get outta here. The new home will be a huge upgrade and roughly 2.5 times the value of our current home. We don't have the cash to make a 20% down payment, and we need to sell our current home to do so. We're considering making an offer contingent upon the sale of our house, but I don't know if sellers go for that kind of thing much. I realize it's far from ideal for the seller to do that, but I know it is sometimes done that way. I suppose my question is how should I approach this with the seller so that it might be more attractive for him? Earnest money? How much? Should I offer the seller an easy way out of the contingency agreement if they get another offer, like a kick out clause? What is an appropriate length of time to ask for?

I know the house has been on the market for while, and the owner doesn't seem like he's in a great hurry to sell. He doesn't even have a plan for what he'll do after the sale, so I'm hoping that giving us a little time to sell ours will give him some time to figure out where he's going to move to.

I do think I can buy the house without the contingency, but it will involve a home equity line of credit and borrowing some money from my parents, which I would prefer not to do if I don't have to.

What say you?

P.S. It's for sale by owner. No realtor involved.
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Why 20% down payment? Is it owner financing and that’s what he wants? Is it what you want to not have to get Mortgage Insurance? If it’s that, you could get a lower down loan, put up with the higher monthly payments to cover the Mortgage Insurance for awhile until you get your present house sold and can use money from that to pay the new loan down to 80% equity and make the insurance go away.
 
Well, they went for the contingency. Easy peasy. In fact, they seemed a little relieved to have a buyer lined up, but also little extra time to get themselves placed. They didn't even want earnest money. Walked out with a firm handshake, and we'll put it on paper in the next day or two. Bada boom.

Holy smokes! Now I have a crap load of stuff to do!!!
 
Tell him to take your house on trade in since he does not have a plan.
Maybe he is downsizing and wants something cheaper.
 
If you write it up yourself I'd strongly recommend that you use the same forms that real estate agents use. They are typically available through the Real Estate Commission in your state. They leave little to the imagination and are pretty solid as far as terms and conditions go.
 
Congrats, Andrew! Very exciting!

Ultimately you know how things are done in your area - old fashioned way - and going with that helps a lot. So given that, if you have trouble selling your house I'm sure he'll be reasonable and you can figure out how to proceed. I'm confident it'll work out.

First thing is putting a "for sale" sign in front of your house if "for sale by owner" is the thing around your neck of the woods. :)
 
Get a lawyer to do the agreement and the closing. I was going to write that I did the same thing 20 years ago when I bought this house, contingency. It took a while to sell my old house, right down the wire as a matter of fact, so don't dilly dally getting it listed, getting it sold will help make life easier. Go talk to the bank too, get the title checked on the house you are buying early in the game to find any issues, or search the registry of deeds yourself if you don't want to spend the money yet. I hope it works out for you. It did for me, but relying on selling my house made it stressful, I hope yours goes quickly.
 
SixPapaCharlie said:
So you are moving south?
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Nope. 4 miles north. Unfortunately, that'll put me 3.2 miles from the airport instead of 2. ;)


Thanks everybody. Not really sure why started the thread an hour before making the offer, but it helped me in some way. Now hopefully we can get this little cracker box sold and get into some proper digs, with a freaking shop for the man o' the house! Anybody want to donate some labor? I need to spot of trim work and some painting before I stab the sign out front.
 
OkieFlyer said:
Thanks everybody. Not really sure why started the thread an hour before making the offer, but it helped me in some way. Now hopefully we can get this little cracker box sold and get into some proper digs, with a freaking shop for the man o' the house! Anybody want to donate some labor? I need to spot of trim work and some painting before I stab the sign out front.
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I've got a front end loader that we could drive through the front door. Would that help? :D
 
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