Do Builders Accept Contingent Offers?
By now, it should not be a surprise to anyone remotely interested in selling or purchasing a home that Pitt County is experiencing a hot, seller's market. To refresh your memories, a seller's market indicates that there are not enough homes for sale for the number of buyers in the marketplace. Meaning, sellers hold more leverage than buyers due to the scarcity of the product. However, for buyers that need to sell first, it can be quite stressful.
Most homeowners that are looking to upgrade their current living situation probably do not qualify to carry two mortgages at once and must sell as a condition to the financing they will receive. Since there are few homes on the market, potential buyers are reluctant to put their houses up for sale without knowing if they are able to find another home before their current house sells. If these buyers need to sell their current home first, their offer on a new home is a contingent offer.
A contingent offer is an offer from a buyer that needs to sell their current home to qualify for their new mortgage. For sellers, contingent offers are not preferred since it is adding another party to the transaction. Another party equals more risk for the seller. Contingent offers are risky for sellers because if there is an issue with the other home that has to sell first, they might have lost precious time on the market and could have lost other potential buyers. Plus, the sellers also have to live somewhere else, too. And, if there is a holdup in the contingency, their moving plans could also be compromised.
A lot of buyers looking to sell their current home are looking to find a home better than their current house. The first option for these buyers is new construction. Historically, builders have been reluctant to take contingent offers from prospective buyers for the reasons stated in the previous paragraph. Yet, as the market and economy change, successful builders must also change with the times. If builders did not change their practice, their homes would sell less quickly. If buyers need to sell their home first, but there is a shortage of homes on the market, and builders are reluctant to accept contingent offers, then the majority of buyers would not purchase. If buyers decide to no longer sell their current home and purchase a new one, builders will see a steep decline in their profits.
Since builders have evolved with the housing market, many builders are now accepting contingent offers. To help ease the dangers of contingent offers, builders are accepting contingent offers with a deposit. If the buyer is unable to sell their home in order to purchase a new construction house they have under contract, the deposit is given to the builder and compensates them for losing other potential buyers.
In Pitt County, the deposit amount that builders will take varies by company. Knowledgeable agents will be able to coach their buyers on how much the deposit would be for a potential builder. At Tyre Realty Group, our listing department represents two major production builders and one local builder in Pitt County. Our buyer department at Tyre Realty Group is well trained and knowledgable in dealing with new construction. If you are a potential buyer and need to sell your current home, contact TRG. Our listing team can work with you on selling your home in a timely fashion, while our buyer team can help you with any of your contingency questions.