Prime Edmonton Real Estate - There is a growing trend recently of including the Sale of the Buyer's Home Condition as part of the purchase contract. I always inform homeowners who are trying to sell their home that they have an option - to have 2 properties for a short period of time, or have no place to live for a short period of time. This is because it is unusual to coordinate the sale of the previous home and the purchase of the new home to align up perfectly. This clause is something that is used more often by home buyers when it is a buyer's market, as the home buyer is unsure that there will be a buyer for the current home, and they are unwilling and/or unable to be in possession of both their past home while it still sells and their new home they will be moving into. Adding this condition has both positives and drawbacks, and it is important to understand both before asking your Realtor to include it in the purchase contract
So what exactly is the Sale of the Buyer's Home Condition? Well, it is very much like it sounds. This condition dictates that both the seller and buyer agree that a purchase of the seller's home is not complete until the buyer sells their current home. A Schedule is drawn up outlining the address of the property, how much the property will be listed for sale for, and other important details.
One of those key details is the 'hour clause', which states that the seller has the right at anytime before the condition day to accept another offer from a prospective buyer. Should this occur, written notice is given to the first buyer that they must waive or satisfy all of their conditions within a certain period of time - usually 24,48,or 72 hours from the date and time of the written notice. This length is settled on during the negotiation stage of the sale.
Sound confusing? It can be. Buyers feel pressure to sell their old home so that they don't 'lose' the new home, while sellers can feel like their home sale is being held up over something that they can't control. My experience is that it is an added layer that can complicate a sale.
However, it can also be a great security for both parties as well. For the home seller, it allows them to have the security and seriousness of an accepted offer and allows them to begin their home buying experience in a reduced stress environment. For the home buyer it reduces the risk of having payments on 2 properties for multiple months before their previous home sells.
The key in a successful Sale of the Buyer's Home Condition is that the buyer list their home for a very competitive rate. If this is done, then there is a far greater likelihood of success for all parties involved. However, if the buyer chooses to list their home at or above market value, then the results are more often unsuccessful than successful. This is primarily because this clause is used most often in buyer's market, where listing at or above market value can result in a much longer wait for a suitable buyer.
If these things are all taken into account, including the Sale of the Buyer's home in your purchase contract might be the best for both buyer and seller, making this both a great home buyer tip and a great home seller tip!