Sale-Contingent Offers in Hays County: How They Work

If you need to sell your current home before you can buy the next one, a sale-contingent offer is one way to write that into the contract. In Texas it is done with a standard form, and the form gives the seller of the home you want a way to keep marketing the property while you work on your own sale. Here is what the form actually says, so you know the trade-offs on both sides of the table.

Key takeaways

• The contract is contingent on the buyer receiving the proceeds from the sale of the buyer's own property by a date written into the form.
• If that date passes and the contingency is not satisfied or waived, the contract terminates automatically and the earnest money is refunded to the buyer.
• If the seller accepts another written offer, the seller can require the buyer to waive the contingency within a set number of days.
• Waiving means notifying the seller in writing and depositing additional earnest money. After a waiver, failing to close because your home's sale proceeds did not arrive puts the buyer in default.
• Time is of the essence, so the dates and notices matter.

Where this comes from

In Texas, a buyer who cannot buy unless their existing property sells and closes uses the Texas Real Estate Commission's Addendum for Sale of Other Property by Buyer, TREC No. 10-6, which is added to the main purchase contract. I am quoting the form (the PDF is here), not giving legal advice. TREC notes that the form is not suitable for complex transactions, and for legal questions about your own contract, a Texas real estate attorney is the right person to ask.

What the form says, paragraph by paragraph

Paragraph A: the contingency and its date

The contract is contingent on the buyer's "receipt of the proceeds from the sale of Buyer's property" at a stated address on or before a date you fill in. If the contingency is not satisfied or waived by that date, the form says "the contract will terminate automatically and the earnest money will be refunded to Buyer." The form also includes a notice that the date should be no later than the closing date in Paragraph 9 of the main contract.

Notice the wording: the trigger is receiving proceeds, not just having your home under contract. If your own buyer's financing or closing slips, so can your purchase.

Paragraph B: the seller can keep taking offers

If the seller accepts a written offer to sell the property, the seller must notify the buyer of the acceptance and that the seller requires the buyer to waive the contingency. The buyer then has a number of days, filled in on the form, to waive. If the buyer does not waive in time, the contract terminates automatically and the earnest money is refunded.

For a seller, this is the main protection: you are not locked into waiting on someone else's sale with no way out.

Paragraph C: how a waiver works

The buyer can waive "only by notifying Seller of the waiver and depositing" an additional earnest money amount that is written into the form. All notices and waivers must be in writing and are effective when delivered under the main contract.

Paragraph D: the risk of waiving

If the buyer waives and then fails to close and fund "solely due to Buyer's non-receipt of proceeds" from the other property, the buyer is in default, and the seller may use the remedies in Paragraph 15 of the contract. In plain terms, waiving converts a safety net into a firm obligation. Do not waive unless you have a plan to close even if your own sale falls through, and talk to your lender and attorney first.

Paragraph E: time is of the essence

The form states that "time is of the essence" and strict compliance with the times stated is required. Calendar every date the day you sign.

If you are the buyer

• Price your current home with a plan. The contingency is only as strong as your own sale. We can run a market analysis and a seller net sheet so you know your likely proceeds before you write an offer.
• Choose the dates carefully. Make sure the Paragraph A date works with your own closing date and the lender timeline. Keep in mind the form's notice that the date should be no later than the purchase closing date.
• Know what waiving would require. Decide ahead of time whether you could realistically waive and what additional earnest money you could deposit.
• Ask about alternatives. Depending on your finances, there may be other ways to line up two transactions. Our guide to buying and selling at the same time covers leasebacks and using equity.

If you are the seller

A contingent offer is not the same as a clean offer, and I would not call one good or bad in general. It depends on your timeline and on how far along the buyer's own sale is. When you are weighing one, I would look at:

1. Whether the buyer's home is already listed or under contract, and what stage it is in.
2. The contingency date and the number of days the buyer gets to waive if you accept a different offer.
3. How the dates fit with your own move.
4. Whether you want to keep the home on the market while the contingency is in place. The form's Paragraph B is what makes that possible, so we read it together before you decide.

If you are selling and want a sense of what your home might net, start with our home value tool or contact me. Remember that any estimate is not a promise of a price or timeline.

A note on financing

How a purchase is financed affects whether a contingent offer is workable, and that is a conversation for Dustin, who is the licensed mortgage loan originator on our team. I am your agent, and I will bring him in early so the contract dates and the loan timeline are planned together.

Talk with me before you write the offer

Every move-up situation in Kyle, Buda, San Marcos, Dripping Springs and Wimberley is a little different. Call or text me at 512-820-3084 or visit our contact page, and we can lay out your options before you write or respond to an offer. If you are starting from the buying side, our buyer page is a good first stop, and if you are selling first, see how we sell homes.

Sources

• Texas Real Estate Commission, Addendum for Sale of Other Property by Buyer (form page)
• Texas Real Estate Commission, TREC No. 10-6 form (PDF)