Seller’s Guide to Buyer Contingencies
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 to professional inspections to determine the condition of the home. Generally, these must be performed within seventeen days (negotiable) and removed. These inspection can address any safety, fire, roof, termite and other material 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. Sale 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. Disclosure Contingency – This contingency protects the buyer if the seller does not have the “right” to sell the home due to unforeseen ownership issues on title, for example. This contingency also gives the buyer a set amount of time to review any and all disclosures (required by law and other) provided by the seller.
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.