Selling your home contingent on finding replacement property, it can be done in this market. Good news for seller’s, if you don’t find a replacement in the given time period , you don’t have to move. Sometimes getting your home into escrow first would be best, then writing an offer on the replacement is the best way to go!
When selling a property and also planning to purchase a replacement property, many sellers do not want to sell their existing home if they are uncertain about finding a replacement home. If there is a small inventory of homes for sale, a seller may find many potential buyers for their existing home. On the other hand, if the same seller is competing with many buyers for a replacement property, many sellers may want the security of knowing that they have a permanent place to live once their property has sold.The California Association of Realtors “new” form SPRP — “Seller’s Purchase of Replacement Property” is due to be released toward the end of November 2014. This addendum provides a seller with a contingency to enter into a contract for a sale of their property contingent upon the seller finding/closing escrow on a replacement property. In paragraph 1A of the SPRP — the addendum defaults to the provision which gives a seller 17 days after acceptance (unless otherwise agreed) to remove this contingency or cancel the agreement. If the seller does not remove the contingency, in writing, within the time specified — the buyer can give the seller a “Notice to Seller to perform” to remove the stated contingency. If the seller does not remove the contingency, the buyer can cancel the agreement. If the box is marked in paragraph 1B of the SPRP for a “concurrent close,” then the seller’s contingency remains in place until the seller has actually closed escrow on the replacement property. As a buyer, paragraph 1B creates a situation which puts the buyer of the property being sold at risk (the seller can cancel the sale of the property by using this contingency) throughout the escrow period. If the seller is unable to close escrow on the replacement property, then the seller would be able to cancel the sale of their property at anytime during the length of the escrow period — leaving the buyer without a home and with all the expenses/costs associated with the purchase of the home — inspections, appraisals, and other fees. One option for a buyer is to try to negotiate with the seller to have these expenses reimbursed if the seller cannot find a replacement property and subsequently cancels the transaction.
Another option for a buyer to avoid incurring expenses is to negotiate when the time periods in the purchase agreement would begin for inspections, contingencies and other obligations. The SPRP form paragraph 2A gives the buyer and seller options for the time periods to begin in the purchase agreement. The first box in paragraph 2A (if marked) specifies that the time periods would begin “as specified in the agreement” — when the contract is accepted. The second box (if marked) specifies that the time periods in the purchase agreement will begin “the day after the seller removes the contingency of the purchase of a replacement property.”
In addition, a separate paragraph provides that the seller may extend the close of escrow date for the sale of seller’s property for an agreed upon time by providing buyer with a written notice at the time the seller removes the contingency pursuant to paragraph 1A.
These important terms of the SPRP need to be negotiated to satisfy both buyers and sellers. For more information, contact a professional Madelaine 310.869.1712 Dre#01377862