What Is a Contingent Offer?
In buying a home there are many moving parts to the transaction and certain variables you may want to try and control. These variables may result in what are known as contingencies which can be placed in the offer to purchase. This article will detail out what some of the common ones are.
Within the offer a buyer will want to be insert some basic protections allowing them to back out of the agreement just in case. The most prominent type of contingency is one where the buyer of the house needs to close on an existing home to realize and use the equity from that property to use on the purchase of the new home. Other contingencies within a purchase agreement would be having a satisfactory home inspection and a satisfactory home appraisal to support the purchase price of the house.
One of the most used contingencies is securing a mortgage approval within a certain period. Specifics such as what type of mortgage financing will be placed in the offer. One common one is the noting if the buyer is securing FHA or Conventional financing. The seller has the right not to accept an offer if they do not feel comfortable with any contingency in the offer. Once an offer is accepted, the property is taken off the market for a period so seller’s need to be careful.
A contingent offer is drawn up by the buyer’s real estate agent and presented to the seller’s agent who in turn discusses with the seller. They will review any contingencies contained in the offer.
Lastly, contingencies are present to protect the buyer and certain unknowns. Sellers typically can be skeptical of contingencies as well. It is always good to find and work with a trusted real estate agent and mortgage advisor in these situations.