What You Should Know About Contingencies
|Commonly used terms|
Whether you’re a home buyer or a home seller, it’s important to understand what a contingency is and how you can use it to your advantage. Contingencies are terms you can include in a contract that must be met before the sale can be completed. Some popular contingency types are explained below.
A financing contingency is one of the most common options buyers include in an offer. This contingency stipulates that if the buyer is unable to secure a loan to buy the property, they can back out of the purchase. This ensures that they aren’t held responsible for purchasing the home if their loan falls through.
A home sale contingency is a popular option for people who are selling the home they currently live in to pay for the home they hope to buy. When they submit an offer on the new home they wish to buy and include this contingency, they are offering to buy the home after their current home sells.
A home inspection contingency states that a buyer’s offer is dependent on a home inspection not revealing any large, unforeseen problems.
A sight-unseen contingency is sometimes used in a seller’s market. It states that the buyer is willing to move forward and purchase the home without actually seeing it in person. This can be appealing to sellers with busy schedules who don’t have time to allow many different buyers to tour their home.