Need some advice with a Contingency Sale

[Jeff Andrews]

Hi Everyone, my name is Jeff and I live in Bend, OR.  We have a small 2-Bedroom Cottage that is super cute and also in a very desirable neighborhood in the NW side of town.  I'd love any advice/ feedback.  We have a 4 year old and 1 on the way next month (Nov).  We're bursting at the seams in our place.  We found a larger 3 bedroom house that we love and made a contingent offer that was accepted based on the sale of our home.  While we currently have about 10 days left to sell our house, here is the action we've gotten:

Offer at 415K all cash, but buyer ended up buying another house (he was backup offer and front offer fell through, so his was next up)

Offer at 418K, BUT another contingent offer of her selling her house.

I can get financing to buy the other home and keep ours as a rental, but it will deplete most all of our cash.  Our current house would cashflow about $200 to $300/ month.

With winter setting in and with fewer buyers out there (and probably fewer renters), what would you all do?  Let me know if you need more info.

Here are the options, I see:

1) If no reasonable offers, let new home contingency fall through and shop for home in the spring AFTER selling ours

2) Buy new home and keep ours as a long-term rental (will be tight on cash, but could make it work)

3) Drop our current list price to just unload the house (we'd still make money since we bought at the bottom of the market) and buy new house

4) Go forward with buying new house and agree to the contingent offer of 418K mentioned about.  She would rent our house, release 10K of earnest money and would have 4 to 6 months to sell her house and buy ours all while living in it.

Thank you!  -Jeff

[Robert Freeborn]

Out of what you have listed, I would go with option 4. 

However, you could also do variation of 2. I don't know your finances on your old home, but It seems like you could cashout refi to get your cash situation back where you are comfortable, and put someone in on a 6 month lease. It may make your cash flow negative in the mean time, but you could sell it later in the summer and, hopefully, get a better price and more offers for it.