Whether you’re buying or selling a South Carolina home, a primary goal is to secure the most favorable deal possible. Often times, contingencies are part of the buying and selling process. When a sale is contingent, it means that settlement will only occur under certain conditions.
If those conditions are not met, the buyer or seller (depending on circumstances) can bow out of the deal. The majority of real estate offers include some type of contingency, although waiving all contingencies is sometimes a valuable tool for buyers who are locked in a bidding war. Understanding the most common types of contingent sale offers can give you leverage as a buyer or seller.
Home inspection contingencies are most common
More than half of all home sales include a home inspection contingency. A buyer who requests a home inspection can refuse to pursue his or her offer if the inspection reveals defects or damage that was not disclosed to the buyer or needed repairs that the buyer isn’t willing to make.
A home inspection that reveals such issues doesn’t necessarily mean the end of the road for your home purchase or selling journey. There’s often room for negotiation, which is when a skilled agent can be a great asset. For instance, perhaps a seller might be willing to lower the asking price if the buyer is paying for repairs.
Is the asking price in line with the appraisal?
Another common type of contingency regarding home purchase offers pertains to appraisals. If you make an offer on a house and the seller accepts the offer, your lender will undoubtedly require an appraisal. The purpose of this is to make sure the seller’s asking price aligns with the assessed value of the home.
Lenders also pay attention to comparable home sales in the surrounding area of the home you wish to purchase. Under an appraisal contingency, if the assessed value is lower than the list price and the seller is unwilling to lower the price, the buyer can walk away without losing his or her earnest money.
A financial contingency has to do with sufficient funds
If a buyer makes an offer on a home that is contingent on financing, it means that the sale will only go through if the buyer can obtain the financing that he or she needs to make the purchase.
Many buyers want to avoid this type of contingency, so they seek pre-loan approval before making an offer on a house. When there are multiple offers submitted for the same home, a seller is likely to prioritize those from buyers who have been pre-approved for their mortgage.
Contingencies are common but non-contingent offers have an edge
You’re perfectly within your right to make a contingent offer on a home for sale. As stated earlier, a majority of home sales nowadays include one or more contingencies. However, most people want the least amount of stress possible in their home-selling experiences and are more likely to consider non-contingent contracts when there are multiple offers on the table, especially when the prices being offered are similar.