What is a Hubbard Sale Contingency in NYC Real Estate?

What is a Hubbard Contingency for NYC Real Estate Transactions? Learn More: https://www.hauseit.com/hubbard-contingency-clause-nyc/

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A Hubbard Contingency allows a set amount of time for a buyer to obtain a fully executed contract of sale on their existing home before being forced to either walk away or waive their right to walk away from their new purchase.

If negotiated properly with the help of a veteran real estate attorney, a home buyer who needs to sell his old home first won’t have to face the uncertainty of whether he’ll be able to obtain the sale proceeds from his old home in time to buy his new property.

This is normally a scary prospect for buyers who need the money from selling their old home in order to buy, especially if they are in contract on their new place but haven’t found a buyer yet on their old home. They run the risk of forfeiting their 10% of the contract price “good faith deposit” if they are unable to complete the purchase!

An offer with a Hubbard Contingency, also known as a “sale contingency,” is substantially less attractive to home sellers than a comparable offer without such a contingency.

This is because the seller has little information on how likely the buyer’s existing property will sell, how long it will take and what stage of the process the buyer is in. This is even more challenging when a co-op is involved due to the additional uncertainty and time associated with the co-op board approval process.

Furthermore, it is not entirely clear per Real Estate Board of New York rules whether a listing that is in contract with a Hubbard Contingency must change its status to “in contract.”

If that is indeed required, then the seller is at a severe disadvantage because although the seller is allowed to solicit better offers until the contingency is satisfied or waived, the number of buyer inquiries will be dramatically reduced if a property is listed as “in contract.”

Even if a property has a Hubbard Contingency but isn’t listed as “in contract,” the seller still might lose interested buyers who learn that there is already an accepted offer, or that the accepted offer level is at a certain price.

This might discourage buyers who say they’re not seriously searching and those overly polite buyers who say they don’t want to waste anyone’s time. However, these buyers often times do turn into real offers so it’s best to encourage as many viewings as possible.

Why would a seller accept a Hubbard Contingency?

A seller might agree to a Hubbard Contingency if he or she has been on the market very a long time and is desperate to sell.

In that case, an offer with a sale contingency might be better than nothing. However, any smart seller will realize that the deal is not binding as the buyer will have a myriad of ways to make sure his existing home doesn’t sell if the buyer wanted to back out.

Therefore, the seller must continue to aggressively market his home, hold open houses and perhaps even lower the price in a gambit to attract additional buyers.

Visit our website https://www.hauseit.com to see a sample Hubbard Contingency Contract Rider for New York City.

In other parts of the country where purchase agreements are standard forms, the Hubbard Contingency is typically a separate, simple one-page form.

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NYC Buyer Closing Cost Calculator: https://www.hauseit.com/closing-cost-calculator-for-buyer-nyc/
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