In the dynamic world of real estate, buyers and sellers often encounter various terms and conditions that can significantly impact the outcome of a transaction. One such condition that Brooklyn home sellers should be aware of is the sale contingency. In this blog post, we’ll delve into what a sale contingency is and highlight the key factors that Brooklyn home sellers should consider when entertaining an offer that includes this contingency.

What is a Sale Contingency?

A sale contingency is a contractual provision commonly included in real estate contracts. It allows the buyer to make their offer on a home contingent upon the successful sale of their current property. In simple terms, it means that the buyer’s obligation to purchase the seller’s home is contingent upon them selling their own property within a specified period. Therefore, offers that have a sale contingency can be riskier to move forward with since they have an added layer of risk.

Factors to Consider as a Home Seller:

1. Buyer’s Market Conditions: It’s essential to assess the current state of the real estate market. In a buyer’s market where there is high inventory and limited demand, you may receive offers with sale contingencies more frequently. Evaluating market conditions can help you gauge the potential impact on your selling timeline.

2. Buyer’s Motivation and Financial Position: Understanding the buyer’s motivation and financial stability is crucial. Evaluate whether the buyer has already listed their property, how long it has been on the market, and if there have been any offers. Ideally, they will already be in contract and if that’s the case, you’ll want to see a copy of the contract in order to see the terms, contract date, anticipated closing date, etc. Additionally, review their financial qualifications, including their creditworthiness and mortgage pre-approval status.

3. Timeline and Contingency Period: When considering an offer with a sale contingency, pay close attention to the proposed timeline and the contingency period. Ensure that the timeframe aligns with your own goals and requirements. Longer contingency periods may increase uncertainty and potentially delay the completion of the sale.

4. Contingency Release Clauses: Work closely with your real estate agent and attorney to include contingency release clauses in the contract. These clauses can establish certain benchmarks that the buyer must meet within a specified period to maintain the validity of the contingency. For instance, you can include a clause that states the buyer must actively market their property or provide evidence of offers after a set duration. Or it can state that if the buyer has not found a buyer by X date, then the seller will have the right to cancel the contract.

5. Backup Offers: While considering an offer with a sale contingency, it’s prudent to continue marketing your home and accepting backup offers. If a stronger offer comes in without a sale contingency, it may provide you with an alternative in case the initial offer falls through.

All in all, sale contingencies can present both opportunities and challenges for Brooklyn home sellers. As a rule of thumb, you generally would not want to entertain an offer with a sale contingency if you don’t have to. However, if you don’t have any offers on your property, or if the offer is a very attractive one, then it may make sense to entertain it and in that scenario, you just want to make sure that your agent does their due diligence to make sure that the transactions will have as little risk as possible.

By understanding the concept of sale contingencies and carefully evaluating key factors, Brooklyn home sellers can make informed decisions when entertaining offers. Remember to consult with a trusted Brooklyn real estate professional who can provide guidance and help navigate the complexities of sale contingencies, ultimately assisting you in achieving your selling goals. If you are thinking of selling your home and would like a free consultation, feel free to fill out the form below 🙂