Making a contingent offer on a property can be a strategic move in certain situations, but it also comes with its own set of risks and considerations. Here are some factors to keep in mind when deciding whether to make a contingent offer:
- Market Conditions: In a competitive seller's market where there are multiple offers on properties, making a contingent offer might put you at a disadvantage. Sellers often prefer offers with fewer contingencies to ensure a smoother and quicker sale.
- Contingency Types: Contingent offers typically include contingencies such as selling your current home or securing financing. These contingencies protect you as a buyer but may also give the seller less certainty about the sale. Consider the likelihood of meeting these contingencies within the required timeframe.
- Seller's Motivation: Understanding the seller's motivation can help you gauge their willingness to consider a contingent offer. If the seller is in a hurry to sell or has had difficulty attracting buyers, they might be more open to contingent offers.
- Your Financial Situation: Evaluate your financial capacity to manage multiple mortgages if you make an offer on a new property before selling your current one. If you can comfortably carry both properties, the risk associated with a contingent offer might be more manageable.
- Backup Plans: It's essential to have backup plans in case your contingencies fail. Consider alternative housing options, bridge financing, or the possibility of negotiating an extended closing period to provide more time for your contingencies to be met.
- Clear Communication: When making a contingent offer, ensure that your real estate agent effectively communicates the terms and conditions of your offer, including the specific contingencies, to the seller. This can help establish trust and understanding between both parties.
Ultimately, whether making a contingent offer is a smart decision depends on your specific circumstances, the local housing market conditions, and your risk tolerance. Consulting with a qualified real estate professional who is familiar with your local market can provide valuable insights and guidance to help you make an informed decision.