Dear Shak&Jill,

My wife and I are ready to move, but I don’t want to get stuck with two mortgage payments.  How do I guarantee that I can sell before I buy?

The
only way to “guarantee” that you sell before you buy IS to sell before you buy.
This would require a double move. Sell and close on your home and move
to a temporary location while you search for your new home to purchase. There
are no guarantees in a real estate transaction, so this is the safest option,
albeit not the most convenient one and certainly not the most popular choice.
Although I mentioned there are no guarantees, you can approach your purchase
with one of two safety nets.

The Home Sale Contingent Offer

Writing
a home sale contingent offer can give you the protection that you are looking
for by insuring that if something falls through on your transaction even at the
closing table, you are not responsible to the party that you are purchasing
from to complete the sale.

This
is the best scenario for you, however many sellers are not willing to take on
your risk and if they are, they will probably expect you to pay more for their
home than that of a “firm” buyer. One other thing to consider is that most
sellers will require that if they do accept your contingency, they will likely
retain a buyer kick-out option. This option will enable them to give you notice
to remove your contingency usually within from 24 – 72 hours, or the contract
terminates at the expiration of that time frame.

This
can put you in a bad situation with your home sold but no home to go to. The
only insurance you have against this happening is to negotiate that the seller
that you are purchasing from, agrees to remove this “kick-out” clause when your
home goes under contract, or to have a bridge loan in place so that you can
remove the contingency. This however would make you responsible to close
regardless of if your buyer closes on your home.

The Sale Contingent Offer

The
other scenario is to get your home under contract, then write an offer
contingent upon your successful closing. This is a little more attractive to
the seller as the time consuming part, finding the buyer, is already done.
Typically you can negotiate no “kick-out” clause for the seller and are
protected all the way up until closing.