I do not recommend this at all. Too many negatives for seller. In our market we have not accepted contingencies on house to sell for years & years.

Just like pre-qualified buyers, went the way of the dodo bird.

Before I made my recommendation to my client about accepting the offer with a contingency I would talk to the other agent and get more information about the buyers contract on the sale of their current home.  I would check out their house in mls, and would need to know the major terms and conditions.  I would then talk to the buyers agent who is purchasing the house and find out their thoughts about their transaction closing and funding.

That is a rare occurance these days but, in the past, a hefty, non-refundable deposit would be required and I also do a CMA on the buyers' current home and the marketing being done for it.

It's not 'making sure' - minimal risk is the best you can do with a contingency, Praful.

You cannot eliminate risk in this regard, you can only mitigate. You can get some non-refundable money; you need to know everything you can about the buyer's current home listing situation... if they are in a neighborhood where everything sells in a week or less... there is less risk than where things take months to sell.

You can't ever be 100% sure but I normally like it when they get past inspections.

This is just not rocket science.
Our contingency agreements have a set amount of time, usually 30 days, during which buyer can tie up the property.
If their house is already in escrow, and the inspection period is less than that, then it's no more dramatic than waiting for loan approval. Contract allows us to communicate with the buyers escrow to stay informed as to the status of their sale.
Having said that, if the buyers house is not sold or God forbid not on the market, and it's not in an extremely fast-moving area if it is listed, then we simply wouldn't accept the deal.
Is there risk? Of course there's risk, there's risk with every transaction. it's real estate.
Legalized gambling.
Roll the bones!

1. Bump Clause
2. Research the other sale, and the buyers associated with it.

   I cannot advise you to accept this offer.  Your house will show contingent in MLS, which means that agents won't show it.  If the buyer's house never sells, you have lost all that time.

Ken Jones Real Estate Advisor summed it up well and in short form!

It is very rare here that an offer like that would ever be accepted. Hasn't been a normal practice for many years.  

There's always risk when you accept a Hubbard Clause but there's risk in any buyer & some homes are most likely to sell to someone with something to sell so how do you mitigate that risk? Ask the buyer's Agent if they are on the market? under deposit? how far along they are into their deal? What are the timelines on their deal? what are the contingencies of their deal? On their offer make sure there is a specified date you must close by otherwise the deal is off...

I make sure the home is under contract, i ask for the contract and info on both the inspections and the buyer for their homes mortgage

You need to provide the wording in the contract.

If the buyer's home is already in contract, then the issue is not as great as when they have not yet got a deal on their home. In Oregon we have a form called a "contigent right to purchase" which dictates timelines for when the buyer's home needs to be in contract plus if acccepted, the seller's home is in bumpable status and others can offer and bump the primary buyer if they are not in a place to remove their contingency.

Advise. Guide. Recommend.  Give the seller the information they need to make an informed decision.  Beyond that, there are no guarantees. 

Many others have provided solid answers...one thing I do that has not been mentioned here is personally look at the home they are trying to sell.  

Praful,

I agree with Lyn Sims 

Ken Jones Real Estate Advisor nailed this one!

put in a kick out clause if the buyers home is not already under agreement with a strong buyer

We NEVER accept these offers...

The contractual laws of the State of Florida do not allow agents to remove risk from a seller accepting ANY offer which includes contingent offers. 

The magical words are 'Buyer can terminate at buyers sole discretion."

Guarantees to the seller are not available. However, an agent can try to compensate the seller for their pain with $$$$ from the potential buyer.

In California there is no protection for the seller.  You are not allowed to have the home listed as "Active", even if the offer is contingent on a home selling that isn't even listed yet!  No one will show an "active under contract" listing.  Long gone is our status of "Contingent" or "CYB" which would have given protection to the seller.

that's a contingency that would never happen in this sellers' market.... that's a buyer's market contingency.... when there are tons of listings and buyers call the shots.... 

at that point, there needs to be a 30 day contingency to sell and then all bets are off....that's how we did them.... 

Too long to explain here. There are many ways. It's the subject-matter of a webinar.

I ask questions in order to minimize risk. This is real estate (and real life) things can and do happen. 

This just means there is more to vett & investigate....

I discourage such offers unless the house is already under conrtact

I don't accept those offers.

I do it by stipulating that the listing stays active in the MLS and that these buyers have a 24-hour kick out clause.

In our brisk Seller's market, I always recommend the buyers at least obtain an offer prior to writing.   My sellers won't take them.

Perfect protection for the seller is not available. Attempts to minimize risk for the seller include “bump” clause, limited time periods for the contingency to be removed, due diligence regarding agent’s investigation of the buyer’s sale.

In our current market, more common is a contingency on the part of the seller re: finding a replacement property. In a multiple offer environment, offers to purchase contingent on selling a house are not favored.

A solid cash deal still ahs a few risks involved.

I advise and mostly sellers only accept with a kick out

If I had a seller wanting to accept and offer contingent upon a buyer selling thier current home then I would put a dead line on the contingency. 

"Buyer has 2 weeks from acceptance date of this contract to provide written evidence of thier home located at 123 Main street being under agreement."

Time periods are the key and continuing to market the home for backup offers is essential as well.  It starts with making sure the buyer's home is listed, priced right and being in escrow would be preferred.  I would give them a time limit to have all contingencies on both home removed.  There is never a guarantee is sales just doing our best to protect the best interest of our clients.