Should home seller accept contingency offer?

Should home seller accept contingency offer?
Date Published: January 24, 2014

Dear Sue,
My home has been on the market for a very long time. Over a year.
I must admit that I mistakenly over priced it to begin with. I have always been told that you can't get what you don't ask for and you can't go up but you can always go down.
My agent warned me against overpricing my home but of course I knew better!
After several price reductions I finally received an offer. The price is acceptable but it is contingent upon the buyer selling their home.
The way I understand it is the buyer wants to buy my home but only if he sells his house. I have never heard of such a thing and I'm not sure if I should consider the offer.
My agent tells me that “contingency” offers are happening quite a bit right now and that I should consider it.
I don't want to make another mistake because this home-selling process has gone on long enough!
~ Confused Cal

Dear Cal,
I have heard from home sellers "I can't go up but I can always come down" more times than I care to remember.
Pricing real estate is not an exact science. It boils down to “probability” based on historical information.
One of my dearest friends, who happens to be an appraiser, told me that the best appraisers are the best guessers and I believe it. In fact, I always say the more I know the more I know I don't know.
I do know, however, that homes are evaluated in ranges. For instance, market data used to analyze a particular home may show a low value of $200,000 and a high value of $250,000.
The asking price depends on where the home that's being analyzed falls within that range. Factors such as condition, location and amenities are considered. If it's an average property it might be priced in the middle at say $225,000. If it's above average it might be priced at the upper end of the range say at $250,000.
The key is to be objective.
My guess is that you were not being objective when your agent provided you with a range of value.
Your agent is correct. Many offers that are being made today are contingent upon the buyers’ home selling. Homebuyers are reluctant to sell their homes until they find a replacement home. Our unusually low inventory means that there's not a lot of homes to choose from. Buyers are also finding it too cumbersome to move twice.
Should you accept a contingency offer?
It depends.
Some contingency offers go very smoothly and close quickly because they are priced right.
I would suggest having your agent thoroughly research and evaluate the buyers’ home and qualifications before accepting.
The more control and oversite your agent has over your buyers’ sale the more successful your sale is likely to be.
Remember that you will continue to offer your home for sale. Some potential buyers may not want to look at a property with a contingency offer, but in this tight market where inventory is in short supply more buyers will look at your home than won't.
Should you receive another acceptable offer you need to give the first buyer X number of days to remove their sale contingency and perform. The California Association of Realtors contract defaults to three days, but I would recommend shortening it to 24 hours.
Your agent will be able to counsel you on the ins and outs of a contingency contract.
If you choose to accept it after taking everything into consideration it could be a matter of good Home $$$s and Sense.
Sue Thompson is the owner of HomeTown Realtors in Auburn. She can be reached at seesue@mac.com, or at www.homedollarsandsense.com.