Reflecting on an Open House this weekend (both Saturday and Sunday) on Tangerine Place in Olinda Ranch, I noted several “lookers” who came throught the door making the following comment:
“We sold our house, we’re renting and we have a down payment for our next purchase.”
Although buyers today know that they are in the proverbial “driver’s seat,” they also know that they have a much stronger negoiating position when they submit a non-contingent offer. In other words, they don’t have a home to sell before the deal can go through. In real estate circles, we know that the purchase of a non-short sale / non bank-owned residential property is 90% of the time contingent on several items: loan approval, home appraisal, inspections, etc. However, when we’re talking about a “non-contingent offer,” we mean an offer that is not dependent on the buyers having to sell their home in order for escrow to open on the current transaction.
If you’re a buyer, here is the “pyramid of strength” in terms of negotiating power (BOTTOM BEING STRONGEST)
NEED TO SELL HOME, HOME NOT ON MARKET
NEED TO SELL HOME, HOME IS CURRENTLY ON MARKET
NEED TO SELL HOME, HOME IS CURRENTLY IN ESCROW WITH BUYER
HOME HAS BEEN SOLD, PROCEEDS ARE IN BANK AS DOWN PAYMENT ON PROPERTY
In this market, to put in an offer “contingent upon the sale of buyers’ property” is a very weak position. The sellers have no confidence that your home will EVER sell, and your offer ties up their home and can waste their time AND their money (should they lose equity as weeks and months go by). It is advisable to, if possible, put the “horse before the cart” and have your home at least in escrow before you make that offer.
NIC PETROSSI, Orange County Real Estate Advice 