How to Work Through Contingencies when Selling Your Home?
When selling your home, you will often see buyers including contingencies in their offers. Any contingency in an offer has the ability to delay your sale. Make sure to discuss the offer in detail with your agent.
Typical contingencies that buyers often include in purchase agreements:
Building and pest inspections is the most common contingency that is included. For good reason, buyers are spending a lot of hard earned money, so cant simply take your word at face value. An inspection contingency allows them to get a third-party home inspection to ensure there are no major surprises.
If the building inspector finds issues in the home, the buyer will do one of three things:
- Ask you to perform some or all of the repairs before closing.
- Ask you for repair credits, so they can pay for the repairs themselves.
- Do nothing and leave the deal as is.
This contingency allows a buyer to back out of the sale if their mortgage is not approved. This can also be if the bank valuation is vastly different than the sale price.
Home Sale Contingency
This is a contingency that many sellers will push back on. It affords the buyer a specified amount of time to find a buyer for their current home, and allows them to walk away from the sale if they fail to do so. A home sale contingency can be risky to sellers because there is no guarantee that the home will sell.
Before agreeing to a home sale contingency, it is important that you research potential buyer’s current home.
- Is their home actually on the market
- Get your agent to check the comps to ensure it is listed at the correct price
- See how long it has been on the market (if it has been for some time – why?)
- Check to see what the average days on the market statistic is and how their home relates to this.
Contingencies are placed in a contract to protect both the buyer and the seller. It’s very important that you talk with your agent and completely understand any contingencies in detail before you sign anything.