Question: I’m ready to make an offer on the house I want to buy. My lender has pre-approved me for the full price of the new home. Would the buyer balk if I made the contract contingent on the sale of my home? On the other hand, I could take an equity-out of my current home and not have the contingency. What should I do?
Answer: Like most challenges, the question boils down to which approach you believe is best — the one you’re most comfortable with.
As long as your offer is generally strong (close to the asking price combined with an earnest money deposit of at least 2 percent to 3 percent), most sellers will accept the contingency of your home sale.
On the other hand, your offer would be much stronger without that contingency. So, who knows, maybe without that contingency you could offer $5,000 or $10,000 less for the house. You’re negotiating, so it doesn’t hurt to find out if you can improve the terms.
But there is one additional advantage for you with the equity-out: You’d have one less thing to worry about, one more reason that this transaction will close. You have any stress to deal with already, right?
In the final analysis, the equity-out makes things easier for everyone.
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