Many homeowners are held back from purchasing a new home because they want or need to sell their current home. Many potential buyers have heard about home sale contingencies, but fewer have heard the phrase “Settlement Contingency”. By putting yourself in the shoes of a home seller, you know most sellers are less likely to accept your purchase offer if you have a contingency that lets you first try to sell your existing home. A settlement contingency can give you the time needed to close the sale of your current home but cause less concern to the seller of a home you wish to buy.
A settlement contingency can prevent you from feeling you are forced to accept the risks of a no contingency offer. This contingency is useful if you have already put your home up for sale, and both received and accepted a purchase offer. A settlement contingency allows you to have a valid purchase agreement for your new home up until the specified scheduled settlement date for your current home. If you can not close escrow by the specified date, your purchase agreement can be terminated and your earnest deposit returned to you. Again, putting yourself in the shoes of a seller, it is easy to imagine that knowing you already have an accepted sale for your home and a specified date for it to close escrow, the risk your purchase offer failing because of your own home sale, has much less uncertainty and risk. Furthermore, the seller has a pretty good estimate of when he will receive his money from the sale of his home. The seller may judge the risk to him of your settlement contingency to be quite acceptable.