A home sale contingency can let you make an offer without fully committing to carry both homes at once, but that comes with added pressure since the offer depends on your current home selling.
A home sale contingency contract usually gives you a set period to sell your existing property before completing the new purchase. That can be a useful window to bridge the gap between selling your home and buying a new one, but some sellers prefer offers that don't depend on another sale.
Home Sale Contingency Basics
| Question |
How It Generally Works |
| What is a home sale contingency? |
A contract condition that gives you time to sell your current home before completing the purchase of another home |
| Why use one? |
It can reduce the risk of being required to buy the new home before your existing home sells |
| Why might a seller resist it? |
The seller's transaction now depends partly on whether your current home sells |
| Can the seller keep showing the home? |
The contract can include a continue-to-show or kick-out provision that allows the seller to consider other offers |
| What if your home does not sell? |
Your rights depend on the contingency language, deadlines and other terms in the purchase agreement |
| What are the main alternatives? |
Selling first, bridge financing or borrowing against equity in your current home |
What Does It Mean to Make an Offer Contingent on Selling Your House?
Making an offer contingent on selling your house means the purchase agreement includes a condition tied to the sale of your current property.
The National Association of Realtors (NAR)explains that a home sale contingency grants a buyer time to sell a current home before closing on the new one. The parties negotiate the exact deadline and other terms.
Let's say you own a $400,000 house and want to use the equity from its sale toward the down payment on a $550,000 home. You can submit an offer on the $550,000 property with a condition stating that your purchase depends on selling your existing house within the agreed period.
If your current home sells and the contingency is satisfied, the new purchase can continue. If it does not sell, what happens next depends on the purchase contract.
That last part is critical. A home sale contingency is not a universal clause with identical protections in every transaction. Deadlines, notice requirements, cancellation rights and treatment of earnest money depend on the language you and the seller agree to and applicable state law.
How a Home Sale Contingency Works
The contingency usually establishes a deadline for selling your existing property. The contract can also address whether your home must simply go under contract or whether the sale must actually close.
Home Sale Contingency vs. Home Close Contingency
There is a useful distinction between needing to find a buyer and already having one.
A home sale contingency generally applies when your existing property still needs to sell. A home close contingency can apply when you already have an accepted offer on your current home but need that transaction to close before you can complete the new purchase.
NAR distinguishes between these two contract structures. A seller may view a buyer whose existing home is already under contract differently from one who has not yet listed the property.
For example, an offer can look more certain if your current house is already under contract, the inspection is complete and the transaction is approaching closing. There are still risks, but fewer steps remain than when the home has not yet been listed.
The Contract Sets the Timeline
A home sale contingency should specify how long you have to meet the condition. It can also establish what happens when the deadline arrives.
A short window can make the offer more attractive to the seller because the property is not tied up for as long. An unrealistically short deadline can create problems for you if the existing home has not been listed, marketed or placed under contract.
Make sure the timeline reflects where you actually are in the selling process rather than choosing a deadline solely to make the offer look stronger.
Why Sellers May Resist a Home Sale Contingency
A seller accepting your offer is taking on some of the risk associated with your current home.
If your house takes longer than expected to sell, the seller's own closing can be delayed. If your sale falls apart, the seller may have spent weeks under contract only to return to the market.
This can become more significant when the seller is also buying another house and needs proceeds from the sale to complete that transaction.
A seller comparing two similar offers may therefore prefer the buyer whose purchase is not dependent on another property selling.
That does not mean a home sale contingent offer cannot compete. The seller considers the whole offer, including price, financing, deadlines, earnest money and how likely the transaction appears to close.
How to Make a Home Sale Contingent Offer More Competitive
You can reduce some of the seller's uncertainty without automatically giving up the home sale contingency.
List Your Current Home Before Making the Offer
A house that is already on the market gives the seller more information than one you intend to list later.
If you already have an accepted offer on your home, your position can be stronger still. At that point, the remaining issue may be getting the existing transaction through closing rather than finding a buyer from scratch.
Before choosing a strategy, compare the timing options for buying before selling your current home.
Use a Realistic but Efficient Timeline
The seller may be more comfortable with a contingency that has a clearly defined and reasonably short period.
For example, requesting several months to find a buyer can create substantially more uncertainty than making an offer when your existing property is already listed and receiving interest.
A shorter timeline only helps when you can realistically meet it. The contract deadline can affect your rights if your current home has not sold on time.
Have a Strong Mortgage Preapproval
A seller considering a contingent offer is already evaluating one additional dependency. Strong financing documentation can reduce uncertainty elsewhere in the transaction.
The CFPB describes a preapproval as a lender's tentative willingness to lend up to a certain amount, subject to further confirmation.
A preapproval is not final mortgage approval, but it can demonstrate that a lender has already reviewed at least part of your financial picture. The amount of underwriting behind a letter can vary, so understand the difference between mortgage preapproval and prequalification.
Be Thoughtful About Earnest Money
Earnest money shows that you have money committed to the transaction. A larger deposit can make an offer look more substantial, but it also increases the amount tied to the contract.
Do not increase the deposit without understanding the circumstances under which it can be returned or forfeited. Whether earnest money is refundable depends on the contract terms and why the transaction ends.
What Happens to Earnest Money if Your House Does Not Sell?
A properly structured home sale contingency can provide a contractual path to cancel the new purchase when your current property does not sell within the required terms.
Whether that also entitles you to the return of your earnest money depends on the contract and whether you followed the contingency's requirements.
For example, a contract can require written notice by a specific date. Missing that deadline can create a different outcome from properly exercising the contingency before it expires.
This is one reason to pay close attention to the contingency expiration date instead of assuming your deposit is automatically protected for as long as your home remains unsold.
Purchase contracts and earnest-money rules vary, so questions about the legal effect of a particular clause should be based on the actual agreement and law where the properties are located.
What Is a Kick-Out Clause?
A seller may accept your home sale contingency while retaining the ability to continue marketing the property.
A kick-out clause can establish what happens if the seller receives another acceptable offer. NAR notes that the first buyer can typically be given a defined opportunity to show that they can proceed without the home sale or home close contingency.
If you cannot remove the contingency within the period stated in the contract, the seller may then be able to move forward with the other offer.
This arrangement gives the seller more flexibility, but it creates a decision point for you. You may suddenly need to determine whether you can purchase the new property before your existing house sells.
What Happens if Your Current Home Does Not Sell?
If your current house has not sold by the contingency deadline, several outcomes are possible depending on the contract.
You and the seller might agree to extend the deadline. You could decide to remove the contingency if you have another way to complete the purchase. The contract might also allow the transaction to be canceled.
Your ability to proceed without selling first depends on more than having enough money for the down payment. You may need to qualify while carrying the existing mortgage, the new mortgage and any additional financing used to bridge the gap.
A lender also needs to determine how the existing property's mortgage and other obligations affect your debt-to-income ratio under the applicable loan guidelines.
Alternatives to Making the Offer Contingent on Selling Your Home
A home sale contingency is one way to coordinate two transactions, but it is not the only one. The alternatives generally trade contractual protection for additional financing, additional cash or a different timeline.
Sell Your Current Home First
Selling first removes the home sale contingency from your next offer and establishes exactly how much equity you received from the transaction.
The downside is timing. You may need temporary housing if the old home closes before you find and close on the next property.
Your sales proceeds can also simplify the cash side of the purchase because you know how much money is available for the new down payment and closing costs.
Use a Bridge Loan
A bridge loan is short-term financing that can provide funds for the new purchase while you wait for your existing home to sell.
Fannie Mae allows bridge or swing loans as an acceptable source of funds when its requirements are met. For a conventional mortgage sold to Fannie Mae, the lender must document that you can successfully carry the payments for the new home, current home, bridge loan and other obligations.
That additional debt is the major tradeoff. Bridge financing can reduce your dependence on a home sale contingency, but it adds another loan while the existing property remains unsold.
Use a HELOC on Your Current Home
If you have enough equity in your current home, a home equity line of credit, or HELOC, can provide access to some of it before the property sells.
The CFPB explains that a HELOC lets you borrow against your home equity and uses the property as collateral.
The HELOC creates another debt obligation, and its payment can affect qualification for your new mortgage. The line is also secured by the home you plan to sell, so review how the sale will affect repayment of the outstanding balance.
Keep your remaining cash needs in view as well. Using substantial equity for the down payment does not eliminate closing costs, moving expenses or any mortgage reserve requirements that apply to your loan.
Should You Waive the Home Sale Contingency?
Waiving the contingency means you are taking on more of the risk that your existing house will not sell before the new purchase has to close.
Before making an offer without the contingency, determine how you would complete the purchase if your home remained unsold past the closing date.
That could mean qualifying while carrying both mortgages, using other savings for the down payment, obtaining bridge financing or borrowing against your current home's equity.
If none of those options works, removing the contingency solely to make the offer more competitive can create a serious mismatch between the contract you signed and the financing you actually have available.
You should also separate the home sale contingency from other protections in the offer. Removing the home sale condition does not automatically mean you need to waive financing, appraisal or inspection contingencies. Each provision covers a different risk.
Home Sale Contingency vs. Financing Contingency
A home sale contingency and a financing contingency address separate problems.
The home sale contingency covers your need to sell an existing property. A financing contingency addresses your ability to obtain the mortgage described in the purchase agreement.
You can have both in the same contract. Selling your old house does not guarantee that your new mortgage will receive final approval, just as having mortgage financing available does not guarantee that your old house will sell on time.
When comparing offer strategies, look at each contingency individually rather than treating a contingent offer as an all-or-nothing decision.
The Bottom Line
Making an offer on a house contingent on selling yours can give you time to turn the equity in your current property into cash for the next purchase without automatically committing to carry two homes.
The tradeoff is uncertainty for the seller. You can make the offer more competitive by listing your home first, keeping the contingency timeline realistic, having strong financing documentation and understanding how earnest money will be treated if your sale does not happen on schedule.
Before removing the contingency, know how you would complete the purchase if your current home were still unsold on closing day. Selling first, using bridge financing or borrowing against home equity can provide alternatives, but each changes your cash needs, debt load or timing.
Frequently Asked Questions
Can I Make an Offer on a House Contingent on Selling Mine?
Yes, if the seller agrees to the contingency. The purchase contract can make your obligation to buy the new property dependent on selling your current home within an agreed period and under specified terms.
How Does a Home Sale Contingency Work?
A home sale contingency gives you a specified period to sell your current property before completing the new purchase. The contract establishes the deadline and what rights each party has if the condition is not satisfied.
Will Sellers Accept an Offer Contingent on Selling a House?
Some will. The seller may weigh the contingency alongside your price, financing, earnest money and timeline. An existing home that is already listed or under contract can present less uncertainty than one that has not yet reached the market.
What Happens if My House Does Not Sell Before the Contingency Expires?
The outcome depends on the purchase agreement. You and the seller might extend the deadline, you might remove the contingency and proceed using another source of funds, or the contract may allow the purchase to be canceled.
Do I Get My Earnest Money Back if My House Does Not Sell?
A home sale contingency can provide a path to cancel under the conditions stated in the contract, but whether your earnest money is returned depends on the agreement, applicable deadlines and whether the contingency was properly exercised.
What Is a Kick-Out Clause in a Home Sale Contingency?
A kick-out clause can allow the seller to continue considering other buyers after accepting your contingent offer. If another acceptable offer arrives, the contract can give you a limited period to remove your home sale contingency and proceed before the seller can move to the other offer.
Can I Buy Another House Before Mine Sells Without a Contingency?
Potentially. You could sell first and use the proceeds later, qualify while carrying both homes, use a bridge loan or borrow against equity in your current property. Whether those options work depends on your available cash, equity, debts and mortgage qualification.
Is a Home Sale Contingency the Same as a Financing Contingency?
No. A home sale contingency addresses whether your existing home sells. A financing contingency addresses whether you can obtain the mortgage needed for the new purchase. A purchase agreement can include both.
.jpg?quality=80&width=150)
.jpg?quality=80&width=800)
.jpg?quality=80&width=800)
.jpg?quality=80&width=800)
.jpg?quality=80&width=800)
.jpg?quality=80&width=800)
