While sales price is important when selling your house, so are the contingencies attached to the offer. Understanding what these contingencies mean can help you choose the right offer for you.
Here are the 5 Most Common Contingencies
Home Inspection Contingency – This allows the buyer the right of a professional inspection to determine the condition of the home. Generally, this must be performed within 10 to 15 days and removed. The inspection will address structural and system condition issues.
Appraisal Contingency – A professional appraisal will be ordered to ensure the price offered is fair market value. If the purchase will be financed, the lender must ensure the home is worth the loan value.
Final Loan Approval Contingency – This contingency protects the buyer in the event they are unable to obtain final loan approval.
Sales of Current Home Contingency – Sometimes a buyer will make an offer on a new home before their current one has sold. This contingency protects the buyer from having to complete the new sale until their home has sold. I always recommend that you avoid a home sale contingency. If you accept this type a contingency, and the buyer doesn’t sell their house, your house will have to go back on the market. Now, if the buyer’s house is under contract, then a home settlement contingency is an acceptable contingency provided your professional real estate adviser screens the status of the sale of the buyer’s current house first.
Title Contingency – This contingency protects the buyer if the seller does not have the “right” to sell the home due to unforeseen ownership issues.
Contingencies are part of most real estate contracts. As you review buyers’ offers, make sure to consider both the kind of contingencies and how long before the buyer must remove them. This way, you will choose the offer with the best terms and price.
Have you ever had a problem with a buyer’s contingency?