Contingencies in New Home Sale?

potsticker

potsticker

Active member
Do builders (Irvine Pacific, William Lyon, New Home Company, etc) have flexibility in their purchase contracts to add a contingency to sell your current residence? In other words, would they accommodate me if I walked in and wanted to purchase an available lot/home but with the contingency? Or would the gatekeeper (preferred lender) prevent me from getting to that point during pre-qual?
 
It all depends on demand. If they have enough people walking in and signing contracts without contingencies or even all cash then they wouldn't need to. But I think the market has softened a bit now so maybe it's possible. Never hurts to ask. But one big caveat is that the design center options and upgrades deposits may not be refunded even if there are contingencies. In other words one would receive the ernest money deposit back but possibly forfeit the deposits made for options and upgrades,  typically 50%. I would get that clarified before proceeding.
 
Thanks. I currently own and live in a condo in the Bay Area and considering a relocation to OC to be closer to family. Any new construction I'm remotely interested in won't be complete until June (probably closer to July/August w/ the recent rain).  Although I have the down payment, I'm at 30% DTI right now, so I wouldn't be able qualify for a new mortgage unless I sold my exit property.

That's why I'm wondering about adding a contingency, since the property would still be under construction during that timeframe. Selling and then renting short term during construction is inconvenient and expensive...so trying to avoid that.
 
As Bruin stated, it all depends on the demand that the sales offices are seeing.  Irvine Pacific has never allowed buyer contingencies so definitely rule them out.  Other builders like Shea and Toll have allowed you to get into contract if your home was in escrow, a some others only after you listed, and a few allowed you to get into contract without having listed your home for sale.  None of those builders would allow the buyers to get their deposit back if they weren't able to sell their homes.

If your property is desirable and gets multiple offers, you can easily ask and get a rent back of your home from the seller so that way you don't have to move twice.
 
USCTrojanCPA said:
As Bruin stated, it all depends on the demand that the sales offices are seeing.  Irvine Pacific has never allowed buyer contingencies so definitely rule them out.  Other builders like Shea and Toll have allowed you to get into contract if your home was in escrow, a some others only after you listed, and a few allowed you to get into contract without having listed your home for sale.  None of those builders would allow the buyers to get their deposit back if they weren't able to sell their homes.

If your property is desirable and gets multiple offers, you can easily ask and get a rent back of your home from the seller so that way you don't have to move twice.
Click to expand...
IPac allows contingent buyers (I chatted with them over the two years or so I was looking and it was never an issue...you do potentially rank lower on the priority list though).  That is different of course if it is a standing inventory home as there they obviously need quick close.  Other lenders will require you to list your home within a certain amount of time and then have a time frame for selling and you need to give them updates, etc.  Not a lot of projects have massive lists right now. 

This wouldn't be the case if the market was totally hot and you had 150+ people priority list. By and large if you want to buy in Irvine today (in most builds), especially if you are looking at a true SFR (so 1M+ market), you can buy contingent from what I saw.   
 
Bullsback said:
USCTrojanCPA said:
As Bruin stated, it all depends on the demand that the sales offices are seeing.  Irvine Pacific has never allowed buyer contingencies so definitely rule them out.  Other builders like Shea and Toll have allowed you to get into contract if your home was in escrow, a some others only after you listed, and a few allowed you to get into contract without having listed your home for sale.  None of those builders would allow the buyers to get their deposit back if they weren't able to sell their homes.

If your property is desirable and gets multiple offers, you can easily ask and get a rent back of your home from the seller so that way you don't have to move twice.
Click to expand...
IPac allows contingent buyers (I chatted with them over the two years or so I was looking and it was never an issue...you do potentially rank lower on the priority list though).  That is different of course if it is a standing inventory home as there they obviously need quick close.  Other lenders will require you to list your home within a certain amount of time and then have a time frame for selling and you need to give them updates, etc.  Not a lot of projects have massive lists right now. 

This wouldn't be the case if the market was totally hot and you had 150+ people priority list. By and large if you want to buy in Irvine today (in most builds), especially if you are looking at a true SFR (so 1M+ market), you can buy contingent from what I saw.   
Click to expand...

Hmmmm that's interesting, the sales offices that I dealt were clear that your chances of buying a home being contingent were basically zero.  I'm sure they made exceptions here and there for standing inventory homes on slow moving developments.  I just personally find Irvine Pacific to be one of the least flexible home builders out there (New Home Company is up there too). 
 
Yes on New Home Company being not flexible... They only allowed prequaled (through their preferred lender Wells Fargo), non-contingent buyers on their interest list.


USCTrojanCPA said:
Bullsback said:
USCTrojanCPA said:
As Bruin stated, it all depends on the demand that the sales offices are seeing.  Irvine Pacific has never allowed buyer contingencies so definitely rule them out.  Other builders like Shea and Toll have allowed you to get into contract if your home was in escrow, a some others only after you listed, and a few allowed you to get into contract without having listed your home for sale.  None of those builders would allow the buyers to get their deposit back if they weren't able to sell their homes.

If your property is desirable and gets multiple offers, you can easily ask and get a rent back of your home from the seller so that way you don't have to move twice.
Click to expand...
IPac allows contingent buyers (I chatted with them over the two years or so I was looking and it was never an issue...you do potentially rank lower on the priority list though).  That is different of course if it is a standing inventory home as there they obviously need quick close.  Other lenders will require you to list your home within a certain amount of time and then have a time frame for selling and you need to give them updates, etc.  Not a lot of projects have massive lists right now. 

This wouldn't be the case if the market was totally hot and you had 150+ people priority list. By and large if you want to buy in Irvine today (in most builds), especially if you are looking at a true SFR (so 1M+ market), you can buy contingent from what I saw.   
Click to expand...

Hmmmm that's interesting, the sales offices that I dealt were clear that your chances of buying a home being contingent were basically zero.  I'm sure they made exceptions here and there for standing inventory homes on slow moving developments.  I just personally find Irvine Pacific to be one of the least flexible home builders out there (New Home Company is up there too). 
Click to expand...
 
USCTrojanCPA said:
Bullsback said:
USCTrojanCPA said:
As Bruin stated, it all depends on the demand that the sales offices are seeing.  Irvine Pacific has never allowed buyer contingencies so definitely rule them out.  Other builders like Shea and Toll have allowed you to get into contract if your home was in escrow, a some others only after you listed, and a few allowed you to get into contract without having listed your home for sale.  None of those builders would allow the buyers to get their deposit back if they weren't able to sell their homes.

If your property is desirable and gets multiple offers, you can easily ask and get a rent back of your home from the seller so that way you don't have to move twice.
Click to expand...
IPac allows contingent buyers (I chatted with them over the two years or so I was looking and it was never an issue...you do potentially rank lower on the priority list though).  That is different of course if it is a standing inventory home as there they obviously need quick close.  Other lenders will require you to list your home within a certain amount of time and then have a time frame for selling and you need to give them updates, etc.  Not a lot of projects have massive lists right now. 

This wouldn't be the case if the market was totally hot and you had 150+ people priority list. By and large if you want to buy in Irvine today (in most builds), especially if you are looking at a true SFR (so 1M+ market), you can buy contingent from what I saw.   
Click to expand...

Hmmmm that's interesting, the sales offices that I dealt were clear that your chances of buying a home being contingent were basically zero.  I'm sure they made exceptions here and there for standing inventory homes on slow moving developments.  I just personally find Irvine Pacific to be one of the least flexible home builders out there (New Home Company is up there too).
Click to expand...

That puts me in a challenging predicament. With my exit property being just 8 yrs old and valued conservatively in the mid-to-high $500's, it should trade quickly. A rentback is a good idea, but I don't think I can negotiate 6 months rentback from a buyer. If a builder doesn't allow contingencies, I'd essentially have to at least be in escrow before committing to purchasing a new property - and then wait ~6 months for delivery. As a buyer, it'd be much easier if I can shorten the transition timeframe. But if I were a corporation like IP, I guess I'd be greedy too. :)
 
USCTrojanCPA said:
As Bruin stated, it all depends on the demand that the sales offices are seeing.  Irvine Pacific has never allowed buyer contingencies so definitely rule them out.  Other builders like Shea and Toll have allowed you to get into contract if your home was in escrow, a some others only after you listed, and a few allowed you to get into contract without having listed your home for sale.  None of those builders would allow the buyers to get their deposit back if they weren't able to sell their homes.

If your property is desirable and gets multiple offers, you can easily ask and get a rent back of your home from the seller so that way you don't have to move twice.
Click to expand...

Trojan nailed it, demand trumps all. My wife and I were sniffing around Hidden Canyon and they were so hot when they opened that they were essentially only accepting all-cash offers, not writing contracts for people buying with a mortgage.  Some poor bloke asked about being a contingent buyer and they practically laughed him out of the place!
 
BruinDoc said:
USCTrojanCPA said:
As Bruin stated, it all depends on the demand that the sales offices are seeing.  Irvine Pacific has never allowed buyer contingencies so definitely rule them out.  Other builders like Shea and Toll have allowed you to get into contract if your home was in escrow, a some others only after you listed, and a few allowed you to get into contract without having listed your home for sale.  None of those builders would allow the buyers to get their deposit back if they weren't able to sell their homes.

If your property is desirable and gets multiple offers, you can easily ask and get a rent back of your home from the seller so that way you don't have to move twice.
Click to expand...

Trojan nailed it, demand trumps all. My wife and I were sniffing around Hidden Canyon and they were so hot when they opened that they were essentially only accepting all-cash offers, not writing contracts for people buying with a mortgage.  Some poor bloke asked about being a contingent buyer and they practically laughed him out of the place!
Click to expand...
Yeah, didn't like the vibe at their office during that time. I guess you need to have cash overflowing from your pockets for them to be interested in talking to you, or giving brochures.
 
YellowFever said:
Potsticker, first you gotta tell me just exactly where the best potsticker in town is.  I love potstickers.

Next, it sounds like your destiny is sealed.  Put your condo up for sale, then when it sells, move to the OC and just do short term rental or airbnb.  Then qualify for the new home.

Or you could do what I do.  Get married to increase your DTI substantially and so you can qualify like me and hold onto two additional homes while buying from IP.  Right now IP/Wells Fargo is simply asking 30% down from me and they won't even care about the rental income and equity in my rentals.
Click to expand...

In Irvine, I prefer 101 Noodle Express. Pork/shrimp pan-fried dumplings are good.

Wells Fargo actually pre-qualified me last week. They said that my DTI is fine with both my exit property and new property. They counted my annual bonus as additional income, which put me in the clear. DTI is in the low 40%. This gives me some flexibility as I can better time the move and rent my existing property if I elected to.

So, I put down a reservation check at Avalon this week. Their plan 1 made the most sense since I can qualify with both properties.

Also, let it be known that IP gave me a big fat "NO" when I asked about adding a contingency to the contract.
 
best_potsticker_in_town said:
YellowFever said:
Potsticker, first you gotta tell me just exactly where the best potsticker in town is.  I love potstickers.

Next, it sounds like your destiny is sealed.  Put your condo up for sale, then when it sells, move to the OC and just do short term rental or airbnb.  Then qualify for the new home.

Or you could do what I do.  Get married to increase your DTI substantially and so you can qualify like me and hold onto two additional homes while buying from IP.  Right now IP/Wells Fargo is simply asking 30% down from me and they won't even care about the rental income and equity in my rentals.
Click to expand...

In Irvine, I prefer 101 Noodle Express. Pork/shrimp pan-fried dumplings are good.

Wells Fargo actually pre-qualified me last week. They said that my DTI is fine with both my exit property and new property. They counted my annual bonus as additional income, which put me in the clear. DTI is in the low 40%. This gives me some flexibility as I can better time the move and rent my existing property if I elected to.

So, I put down a reservation check at Avalon this week. Their plan 1 made the most sense since I can qualify with both properties.

Also, let it be known that IP gave me a big fat "NO" when I asked about adding a contingency to the contract.
Click to expand...

Congrats! You'll like it, I visited the open house and it's similar to Caserta but slightly more open floor plans :)

And yes anyone looking at this who is thinking about buying in Eastwood...take my advice (when I was looking at Helena).  Provide ALL statements you can whether it's retirement or anything...even get a few bank statements from your parents or Asian last name friends who potentially could be "cousins" and get prequalified non-contingent.  They literally don't even put you on a list if you are contingent.  Just get on the priority list and do your sell while you are waiting and hope the timing works out so by the time you buy, you aren't contingent "in reality".... when I was asking, it was like a 3-4 month wait anyways and then build out took some more months, so like 6 months at minimum until move on...so should be more than enough time to sell your home.  If you must, price lower and sell fast and just eat up the difference with the appreciation you should see at Eastwood (or wife happiness)

Good luck
 
SoclosetoIrvine said:
best_potsticker_in_town said:
YellowFever said:
Potsticker, first you gotta tell me just exactly where the best potsticker in town is.  I love potstickers.

Next, it sounds like your destiny is sealed.  Put your condo up for sale, then when it sells, move to the OC and just do short term rental or airbnb.  Then qualify for the new home.

Or you could do what I do.  Get married to increase your DTI substantially and so you can qualify like me and hold onto two additional homes while buying from IP.  Right now IP/Wells Fargo is simply asking 30% down from me and they won't even care about the rental income and equity in my rentals.
Click to expand...

In Irvine, I prefer 101 Noodle Express. Pork/shrimp pan-fried dumplings are good.

Wells Fargo actually pre-qualified me last week. They said that my DTI is fine with both my exit property and new property. They counted my annual bonus as additional income, which put me in the clear. DTI is in the low 40%. This gives me some flexibility as I can better time the move and rent my existing property if I elected to.

So, I put down a reservation check at Avalon this week. Their plan 1 made the most sense since I can qualify with both properties.

Also, let it be known that IP gave me a big fat "NO" when I asked about adding a contingency to the contract.
Click to expand...

Congrats! You'll like it, I visited the open house and it's similar to Caserta but slightly more open floor plans :)

And yes anyone looking at this who is thinking about buying in Eastwood...take my advice (when I was looking at Helena).  Provide ALL statements you can whether it's retirement or anything...even get a few bank statements from your parents or Asian last name friends who potentially could be "cousins" and get prequalified non-contingent.  They literally don't even put you on a list if you are contingent.  Just get on the priority list and do your sell while you are waiting and hope the timing works out so by the time you buy, you aren't contingent "in reality".... when I was asking, it was like a 3-4 month wait anyways and then build out took some more months, so like 6 months at minimum until move on...so should be more than enough time to sell your home.  If you must, price lower and sell fast and just eat up the difference with the appreciation you should see at Eastwood (or wife happiness)

Good luck
Click to expand...

I used this strategy also: list all bank accounts, retirement accounts, kids' college savings accounts, cash value life insurance, etc. to qualify under non-contingent status.  Then put your existing home on the market and get it sold.  Just beware that when you go this route you are fully committed to buying the new place.  That means if your home doesn't sell quickly enough for whatever reason, you will be on the hook and the proud owner of 2 homes. And you won't be able to retire, your kids won't be able to go to college, you lose your life insurance cash value, etc.  >:D
 
My mistake was that I did not factor in my annual bonus, which increases my salary by 15-20 percent. Since Wells Fargo counted that as income, I was just under their DTI max.

I looked at Caserta but went with Avalon as I liked Eastwood's community a bit better. Also, the floor plan I purchased was ground floor and single-story - which I prefer. I figure this, along with the price point, will be good for resale as it opens a market for singles, young professionals, or empty nesters.
 
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