Everything You Need to Know About Real Estate Offer Contingencies
The 3 Most Common Contingencies
The inspection contingency allows the buyer a certain period of time to conduct inspections and allows the buyer to cancel for any reason within that specified time frame. An appraisal contingency allows the buyer to cancel if the property does not appraise for the amount of the purchase price. The financing contingency stipulates that the buyer is to qualify for a certain type of loan or else they can cancel.
The Cash Offer
Let´s explore why cash offers made by buyers are so appealing. The reason a “cash offer” is appealing to many sellers is that a cash buyer will generally not require an appraisal or financing contingency – which can allow for a faster close since the appraisal and lender approval are the two most time-consuming aspects of a sale.
The Most Difficult Contingency of them all
The 4th most common contingency is a buyer contingency based on the sale of their other home. In a “hot” market or a “Seller’s market,” this contingency can make it very difficult for an offer to be accepted as the entire transaction is dependent on the sale of another property. This is a good contingency for the buyer since it is safer for them to sell their other home first before buying another. But for the seller, this contingency can be the most painful experience especially if they want to sell their home fast.
Tips for both the seller and buyer when facing this Contingency
Any seller considering accepting a buyer contingency based should invest the time to contact the agent representing the other sale as well as the lender handling the buyer’s financing to inquire as to the status of the inspection, the appraisal, and the financing.