Thinking about buying a house without actually having your old house purchased off your hands? We don’t blame you. However, when you really find your dream home you might feel like there’s just no way that you can pass it up. On the other hand, there might be life changing events that really do force you into getting another house. If you’re in a ripe real estate market, you might be able to pull off a deal where you can enter a purchase offer on a new home while entering in a contingency clause that states the deal is only good if your home actually sells.
Now, there is a time and a place for every type of real estate deal that you can think of. These types of sales with contingency agreements got some bad press, but as mentioned — not everything is right of every situation. It’s better to really step back and think about everything that you have going on and then make the decision to go with adding in the contingency. For example, if you don’t have your house listed, it’s going to be hard to really have your potential seller accept your offer. On the other hand, if you already have the house on the market and you can demonstrate that there are several offers available to you, then you will definitely get a lot more done.
However, before you get too excited about the possibility of “reserving” the house of your dreams this way, you need to consider the other outcome: someone else might think it’s their dream home, too. And they already have the down payment and the financing without having to worry about trying to afford two mortgages at the same time.
This is where you go with having a right of first refusal. It basically gives you 72 hours to take action before the seller has the right to demand cancellation of the contract and give you back your earnest money deposit.
You have a few options in this case when you get the 72 hour notice to perform — like getting a bridge loan. A bridge loan is a pretty high interest, high point financing option that can give you the down payment for the house when you don’t have any other source.
Our thoughts? Skip the bridge loan and see if you can borrow the money from your parents or your retirement — both sources are easier and in the case of your retirement, it’s a qualified loan!