Ask Phyllis is a blog series of frequently asked real estate questions. Have a question about real estate? Email us here
I made an offer and the seller countered that my purchasing their home is contingent upon them finding and buying another. I love their home and am serious about buying but fearful that I could wait a really long time for them to find something. What do you suggest?
It is correct that you have no assurance that the seller will find a home of their choosing soon or even ever. If I were your real estate agent, I would talk with the seller’s agent to get a feel for what might be the best approach. Then, I would consider a counter offer similar to one of these:
1) Buyer’s purchase is contingent upon seller entering escrow on replacement residence of seller’s choice within ___ (fill in number of days) from buyer’s acceptance of this counter offer and closing escrow no later than ____ (complete escrow closing date). In the event that seller does not find a replacement property within (use same number of days to find replacement residence) seller will refund buyer’s appraisal and inspection costs not to exceed $1,000.00.
It isn’t fair that you will be out of pocket for inspection and appraisal fees if the seller does not find another home. You might decide not to order the appraisal and inspection reports. But if the seller were to find a home, his offer would be very weak if it was contingent upon his sale with a buyer who has not yet removed his inspection or loan contingency.
2) Buyer agrees to allow seller to rent property back from buyer. Said rent back to be in 30 day increments and shall not exceed 3 months (or even 6 months). Seller to notify buyer’s Realtor® 40 days prior to each 30 day rent back. Seller agrees to pay buyer’s PITI (principal, interest, taxes and insurance).
Every home seller has their own unique needs. After your Realtor® speaks with the seller’s agent, you will know which counter offer is most likely to be accepted.
As far as the rent back, you may agree to just 30 or 60 days. But if the seller is concerned with finding a home, the duration of the rent back could be a deal breaker. If you are in a position to allow the seller to rent back, it may be a plus to have the seller make your first few months’ mortgage payments.
If you do negotiate a rent back, the lender may take issue due to owner occupancy reasons and may want to charge a higher interest rate. Your Realtor® may elect to deal with the rent back by what is considered “outside” of escrow perhaps as an Addendum to the Purchase Contract in order to avoid the lender’s “involvement”.