Contingencies are a great option for buyers who want to go forward with their purchase but need some assurance that the deal will work. A contingent offer means they're still serious about buying your house even if there are contingencies such as an inspection or appraisal before closing on it - which could take days.
The meaning of “contingent” is that there are certain conditions to meet before the contract becomes valid. You might think this means it's not a real estate deal until all requirements for satisfaction have been completed, but in reality, these contingencies can be as simple or complicated depending on what type and when you buy!
A common example: A buyer inserts an offer with no contingencies at a hot market; however if they want their bid approved quickly (or just hope) then including some specific added benefits could sweeten things up enough so it gets done.
There are five types of contingencies most often used within real estate contracts, including:
The offer will go through if the home’s inspection report doesn't reveal anything the buyer wasn't already aware of, or an inspector finds structural/hazardous issues within their future property.
Appraisal Contingency means that the offer goes through if and only when a lender approves your appraisal after assessing an assessment of the home’s value based on comparable houses in their area.
After the home buyer has applied for a mortgage, they are waiting to find out if it was approved. This condition is known as a financing contingency and usually occurs because of some lender requirements that need meeting before giving approval on funding your loan.
In the event that a potential buyer sells their current home to buy your new property, you will get paid. If there is an offer with this contingency in place it may be listed as "Pending."
Title contingencies are a great way to protect the buyer from getting stuck with an unwanted property. If it turns out there are unresolved legal or financial issues with the title, they can pull their offer and walk away without paying anything more than what was paid just for looking at houses in that area.
A contingency clause doesn't necessarily mean all hope is lost for prospective buyers. Different states have different laws as it surrounds contingencies so you'll want to speak with your Realtor about the current local rules of contingent homes in every market, but there are some cases where a home may fall through at closing and this usually protects both parties if they decide together that termination would be best.
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