Accepting a Contingent Offer on Your Home in Tyler

Accepting a Contingent Offer on Your Home in TylerAs you get ready to sell your home in Tyler, this is what you need to know about accepting a contingent offer. You don't have to be open to accepting offers with contingencies, but there are a few reasons you might want to. We can help you walk through the selling experience with minimal stress to reach your goals, including being confident about which offer to accept.

What is a contingency?

Some offers from your potential buyers are likely to come through with contingencies. Contingencies are conditions or clauses included in a real estate contract that must be met for the sale to proceed.  A contingency can be any conditional factor in the offer, but there are a few that are quite common:

  • Financing Contingency: The sale is contingent upon the buyer securing financing from a lender to purchase the home. If the buyer is unable to obtain a mortgage loan within the specified timeframe, they have the option to back out of the contract without penalty.
  • Sale Contingency: The sale is contingent upon the buyer selling their current home before proceeding with the purchase of your home. If the buyer is unable to sell their home within the agreed-upon timeframe, they may terminate the contract or request an extension.
  • Appraisal Contingency: The sale is contingent upon the home appraising for at least the agreed-upon purchase price. If the home appraisal comes in lower than the purchase price, the buyer may renegotiate the terms of the contract, request a price reduction, or terminate the contract.
  • Home Inspection Contingency: The sale is contingent upon the home passing a satisfactory inspection by a licensed home inspector. If significant issues or defects are discovered during the inspection, the buyer may request repairs, credits, or concessions from the seller.
  • Title Contingency: The sale is contingent upon the buyer receiving clear title to the property, free of any liens, encumbrances, or legal issues. If there are title defects or unresolved issues, the buyer may request remedies or cancel the contract.

Are there any risks with accepting a contingent offer?

As with most parts of a contract, there are some risks involved with accepting a contingent offer. Delays in the process or a deal falling through are a part of the process that you will have to accept in this case. 

Accepting a contingent offer can lead to delays in the closing process, as the sale is dependent on external factors such as the buyer's financing, home sale, or inspection results. If the buyer encounters obstacles or delays in meeting the contingencies, it can prolong the timeline for closing and potentially disrupt your plans. If you do accept a contingent offer, try to find ways to be flexible with your closing date. 

There is also a higher risk of the deal falling through when you accept a contingent offer, as the sale is contingent upon the buyer meeting specific conditions. If the buyer is unable to satisfy the contingencies or changes their mind, you may need to relist the property and start the selling process anew, resulting in lost time and opportunity.

Home sales expert Bill Gassett of Maximum Real Estate Exposure provided helpful advice about accepting contingencies.

"Home sellers should understand the risks of accepting traditional contingencies in real estate contracts. The most common is a home inspection and mortgage financing clause. Most homeowners will accept these unless they are in a crazy hot seller's market, in which contingencies are commonly removed from contracts.

A home sale clause is a contingency that you need to be leery of. A buyer asking to make the sale contingent on selling their home is very risky. I rarely counsel my clients on accepting this term. A seller loses complete control of the process. They have no idea if the buyer will price their home correctly. They often lead to disappointment and putting the house back on the market."

Finally, you do also give up some of your negotiating power. For example, if there is a home inspection contingency and the inspection reveals an issue, you may need to accommodate the buyer's requests or concessions to proceed with the sale. If the buyer requests repairs, credits, or price reductions as a condition of removing contingencies, you may need to weigh the cost and impact on your bottom line.

Why should I consider accepting a contingent offer?

With all those potential risks, you may be wondering if it's worth even considering a contingent offer. There are actually some benefits associated with being open to offers with contingencies, too. 

As a Tyler Realtor, we experience contingencies all the time so we know how to handle any of these issues. Accepting a contingent offer can broaden the pool of potential buyers for your home, especially in a competitive market where inventory is limited. By considering contingent offers, you may attract buyers who are motivated to purchase but need additional time or conditions to finalize the transaction. This might translate into more competition for your home or higher offers.

Higher offers are often associated with contingent offers, especially if the buyer is willing to pay a premium or offer favorable terms to secure the property. In a competitive market, buyers may be more inclined to make attractive offers, including contingent offers, to stand out from the competition.

Ready to learn more about selling your home? Contact us any time.

Contact Us

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Post a Comment