If you’re buying or selling a home, you’ve probably heard the term “contingent” or “contingent sale.”
So What is a Contingent Sale?
A contingent sale can be challenging to deal with, but they’re manageable if done properly with an experienced Realtor. As a real estate term, a contingent sale can often mean that a buyer is unable to purchase a property without selling one they already own due to financing, or it could also be based on other types of contingencies. A contingent sale is not the same as a pending sale.
So what exactly are these contingencies? They are the clauses in your purchase/sale contract that give you an out or the right to cancel the contract if something unforeseen or unexpected arises. A contingency can sometimes mean that a buyer is unable to purchase a property without selling one they already own. This is called a Hubbard Clause. Some other contingencies that buyers may have are mortgage approval and inspections. There are also certain things the seller must meet/improve/accomplish with the house before the sale moves on up to pending – i.e. the buyer’s offer is contingent on the seller completing these tasks. They can also help protect you from losing your deposit money and can give you leverage to motivate the seller to help you deal with whatever comes up. As a buyer, contingencies are great, but sellers aren’t so fond of them for obvious reasons. That’s why, in a very competitive market, you might need to avoid them or at least minimize them as much as possible.
Should I accept a Contingent Offer?
There is no right or wrong answer on this one. Every situation is unique. While contingent offers can pose an additional risk to a seller, there are times when it makes sense for both the buyer and the seller to compromise. Talk with your real estate agent to understand what the contingencies are in your contract and what the extra steps will be necessary to bring you to a stress-free closing.
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