We received a firm offer on our home. The sale is closing in three months. We asked our agent if we could close sooner, and found out that the people buying our buyer’s house haven’t sold their home yet. I’m not sure if this might affect our sale, should we be worried? – KEEPING ME UP AT NIGHT
DEAR KEEPING: Someone buying a home will quite often have a home to sell. The person buying that home will have their own home to sell, and so on, and so on, and so on. It’s not unusual for home sales to line up like dominos. Your agent and lawyer will work hard to roll things out seamlessly, but the occasional wrinkle is inevitable, which is why I advise clients not to close their purchase and a sale on the same day. When it comes to setting things up, bridge financing can be your best friend.
As people work through the process of selling one home and buying another, the real estate market shifts constantly like sand under their feet. The complexities of a changing market can be monitored using several different measurements, including average sale price, days on the market (the number of days it takes to sell a home) and the number of months’ worth of inventory buyers have to choose from. Sale price and days on the market are easy metrics to track. Inventory levels are a little trickier, since they are based on how many homes sold in the preceding months. When inventory levels are up like they have been lately, conditions can quickly turn from a seller’s market to a buyer’s market. This can change the pace of transactions, and throw off the timing of the dominos.
To compensate for changes in the market, experienced agents watch for shifts almost on a daily basis, then adjust their strategies to fit what’s happening in real time. The 90-day closing on the offer you received was likely included because the buyer’s agent wanted to leave enough time for everyone to fulfill their obligations, which helps the dominos to fall smoothly. Contractually, you have a firm offer, which means you can carry on with your plans. The people who purchased your house probably have a firm offer as well. The domino that has yet to fall is the buyer of the buyers’ house (as confusing as that may sound), and the solution to their problem may be just a little more time.
Having a 90-day close (as opposed to 30 days) provides the seller some flexibility to make adjustments and get their home sold without resorting to a fire sale. Sometimes a small price adjustment is all it takes to expose the home to a new group of buyers, and find the right person to fall in love. In a hot market, when homes are selling quickly, timelines get shorter and there’s a lot less wiggle room. Buyers are sometimes forced to hedge their bets and hope that things go well on closing day.
PRO TIP: Although we don’t have a crystal ball, these types of layered transactions almost always reach their expected conclusion. If you’re really nervous about your buyer’s-buyer’s house, have your agent reach out to the other Realtors in the transaction chain for updates. #Advice #AskDavid #TheNegotiator
David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Call or text today for your free home evaluation! 519-577-1212.