Every news article talks about the fact that it’s a “seller’s market.” This means
that if you are selling your home, you’ve probably gotten a few offers from which
to choose. While sales price is important, so are the contingencies attached to the
offer. Understanding what these contingencies mean can help you choose the
best offer from the pack.
5 Most Common Contingencies
1. 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 seven days and removed. The inspection will
address any safety, fire, and system condition issues.
2. Appraisal Contingency – A professional appraisal will be ordered to ensure
the price offered in the offer is fair market value. If the purchase will be
financed, the lender must ensure the home is worth the loan value.
3. Final Loan Approval Contingency – This contingency protects the buyer in
the event they are unable to obtain final loan approval.
4. 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.
5. 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.
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