What is a home of choice contingency in a real estate contract? A home of choice contingency is a contingency that protects a seller from having to sell their current home if they haven’t found their next home. This way a seller can sell their home and just in case they can’t find a new home they like and be protected. They can declare the contract to sell their current home void if they can’t find a place to buy, and call off the deal.
Selling a home seems to be much easier than buying a home in this market of limited inventory.
A home of choice contingency may read something like the below:
“This Contract is contingent until 45 Days after the Date of Ratification to allow the Seller to obtain a ratified contract to purchase another home, and then another 30 days for seller to obtain financing for their new home. This contingency will remain in effect unless the Seller delivers Notice, prior to the Deadline of this contingency, to the Purchaser that this Contract is void.”
Do buyers care?
Buyers may lock themselves into this deal for a long while without knowing if the seller will find a new home to buy. The seller may not actually sell their current home. Will buyers hesitate to engage in a contract like this? In a market with such limited inventory it seems there are buyers willing to take that risk.
As a buyer, if you don’t like this type of contingency that favors the seller you have an option. You could offer the seller a rent back period of up to 60 days. This is where the buyer and seller would go to settlement on the seller’s house and the buyer would become the new owner. But the buyer lets the seller live in the house and rent it from them for up to 60 days. This gives the seller time to look for a new home. Of course the seller may reject this. The seller mat want the most safety of not having to sell their current house, which comes from a home of choice contingency.
As with anything in real estate sales, it is all negotiable!
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Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.
