What Is A Contingency Offer?
A Contingency Offer is an offer that has been made by the buyer and accepted by the seller, but it is under review or the sale is contingent until the principles have been met. Whether you have purchased a piece of property before, or you are a first time home buyer- making an offer on a piece of land can come with some ups and downs. If you are not familiar with the process, it can be complicated for some. You have many focuses when purchasing a new property, and the biggest one is the price you offer.
Some buyers can purchase properties with a traditional offer, which includes finalizing the price, receiving a closing date, and a possession date- amongst a few other terms for your agreement. Where the contingency offer comes to play is when one has to meet one of the following conditions:
Inspection Contingency
Appraisal Contingency
Financing Contingency
Home Sale Contingency
Repairs Contingency
The inspection contingency is a common condition that allows the buyers to back out of the offer if there is a significant drawback that arises during the inspection process. During the inspection process, the buyer can ask the seller to fix the issues with the property or take the property ‘as is’ and fix it themselves.
The Appraisal Contingency is when the lender hires a third party to evaluate and appraise the property in order to achieve a fair market value of the property. For example, if the value that was appraised by the third party is less then the sale price, the appraisal contingency grants you the option to back out of the purchase. Why should someone pay more for the property than what it’s worth? It’s only fair to be able to back out of a deal that is overpriced.
The Financing Contingency is another common condition where the buyer makes an offer on the property and it depends on how they secure their finances and if they do it in the time period selected. This gives the buyer time to secure a good interest rate and make sure they can afford to pay for the property.
The Home Sale Contingency or Sale of home contingency allows the buyer to make the offer contingent on their current home if they own a property already. This usually happens when the buyer cannot afford a second property. The contingency will give the buyer a time period as to when their current property needs to sell by.
The Repairs Contingency is similar to the inspection contingency where the buyer can condition the purchase based on the repairs that need to be done. This usually happens before the inspection report is received and the buyer has determined these problems.
If you know that it is time to make an offer, let Realigro help you throughout this process. We have all the tools accessible at your fingertips! Be sure to figure out if you should make a traditional offer or a contingency offer and what circumstances will be incorporated.
Some buyers can purchase properties with a traditional offer, which includes finalizing the price, receiving a closing date, and a possession date- amongst a few other terms for your agreement. Where the contingency offer comes to play is when one has to meet one of the following conditions:
Inspection Contingency
Appraisal Contingency
Financing Contingency
Home Sale Contingency
Repairs Contingency
The inspection contingency is a common condition that allows the buyers to back out of the offer if there is a significant drawback that arises during the inspection process. During the inspection process, the buyer can ask the seller to fix the issues with the property or take the property ‘as is’ and fix it themselves.
The Appraisal Contingency is when the lender hires a third party to evaluate and appraise the property in order to achieve a fair market value of the property. For example, if the value that was appraised by the third party is less then the sale price, the appraisal contingency grants you the option to back out of the purchase. Why should someone pay more for the property than what it’s worth? It’s only fair to be able to back out of a deal that is overpriced.
The Financing Contingency is another common condition where the buyer makes an offer on the property and it depends on how they secure their finances and if they do it in the time period selected. This gives the buyer time to secure a good interest rate and make sure they can afford to pay for the property.
The Home Sale Contingency or Sale of home contingency allows the buyer to make the offer contingent on their current home if they own a property already. This usually happens when the buyer cannot afford a second property. The contingency will give the buyer a time period as to when their current property needs to sell by.
The Repairs Contingency is similar to the inspection contingency where the buyer can condition the purchase based on the repairs that need to be done. This usually happens before the inspection report is received and the buyer has determined these problems.
If you know that it is time to make an offer, let Realigro help you throughout this process. We have all the tools accessible at your fingertips! Be sure to figure out if you should make a traditional offer or a contingency offer and what circumstances will be incorporated.
