Did you just receive a contingent offer? Or is your Realtor recommending you make one on a house? Either way, you can use this guide to the types of home buying contingencies to help you understand the process.
What is a contingent offer?
Before we get into the different types of home buying contingencies, let’s take a minute to discuss what a contingent offer actually is. Essentially, it’s what happens when a buyer puts in a conditional offer on a house. That offer then receives a green light from the seller. However, it will only go through if the seller takes a specific action, such as paying for new appliances or replacing the gutters.
Still need a little more explanation? Check out our previous blog on contingent offers here.
Types of home buying contingencies
You’ll encounter four main types of home buying contingencies:
Buyer home sale
Before you can move, you may have to sell your old home. After all, the money you get from it could be critical to your offer.
It may seem hard to balance, but there’s a type of contingency in place to help. Usually, you’ll have a month or two to sell.
Appraisal
Woo-hoo—you’ve made a great offer! Only, bad news—the info from your bank’s appraisal came in, and you overbid. The appraisal contingency would allow you to walk away from the deal with your deposit if the appraisal came in below what you agreed to pay. Or, you can ask the seller to lower the sale price.
Inspection
If you didn’t know this already: never buy a home without an inspection! From mold to termite damage, it can reveal crucial details.
That’s where the inspection contingency comes in. Once you know what the inspection report reveals, you can negotiate pricing and repairs. Many times, contingent offers hinge on the sellers fixing items from the inspection. Or, buyers can enjoy a sum knocked off the home’s price if they will fix the repairs themselves.
Mortgage
Preapproval takes time. Sometimes, we don’t get the answer we want. If that’s the case and your mortgage falls through, this contingency lets you bow out gracefully.
Summary
Buyers and sellers alike can both benefit from more knowledge at their disposal—like the types of home buying contingencies. And, if you want a Realtor with expertise and information, you can always rely on Ryan Roberts. He operates in the East Alabama area—and he can help you too. Contact him here. Finally, for more interesting facts and guides, check out our blog.