Last Updated on March 4, 2024 by Asfa Rasheed
More people are buying homes than ever before. Yet, many people are not aware of all of the terms associated with real estate. More specifically, the term ‘contingency’ seems to be thrown around a lot without many people actually knowing what it means!
Luckily, our guide is here to teach you the answer to “What does contingent mean when selling a house?” Keep reading so you can be fully informed in this scary and long process.
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What Does Contingent Mean When Selling a House?
A contingency is defined by a scenario in which certain circumstances dictate the final outcome. But you might still be wondering “What is a contingent offer and how does it affect me?”
So in real estate when a home goes into escrow, it will have a set of contingencies. Contingent offers essentially protect you from any unforeseen factors that were not in the original contract.
For example, let’s say a home is valued at a certain price, and you agree to the price but only if the home inspection comes back with no issues. In this scenario, you and the seller have agreed to a contingent contract based on the hopes that the home will have no issues.
However, if the home does come back with an issue after the inspection, you are then able to fall out of escrow, but only if you’re within your contingency terms. For example, some contingency terms last 7 days, while others may have a 30-day contingency.
What Are Some Popular Home Sale Contingencies?
Contingent contracts for home sales usually vary. However, there is some contingent selling offers that we see more often than not. For starters, some buyers have a contingency where they must sell their own home before making a final agreement on the new home.
This type of contingency can get convoluted, especially if you don’t have a real offer on your first home. However, it’s an understandable contingency because no one wants to get stuck with two home mortgages.
Another popular home contingency usually involves the infrastructure of the home. More specifically, the infrastructure of the roof and its remaining life. With these contingencies, you will typically see a buyer make a deal if the roof can last x amount of years.
And the seller will agree if they believe the roof is in good shape. However, if a roofing expert finds that the roof has a fewer amount of years than promised, then the contract will no longer be valid.
These are only some of the contingencies that you can set for any prospective home. Overall, contingencies will depend mostly on the home itself. So if you’re trying to buy or sell an ugly house, be aware that it will come with more contingencies. So you may need representation!
Should I Set Contingencies on an Offer?
Contingencies will protect you in the long run as a buyer. However, it may make it hard for you to find a home, especially if you have really long and strict contingencies set.
And be aware that other buyers may not have any contingencies. And in these cases, the home usually goes to them instead. So if you really want a prospective home, make a good offer and have low contingencies!
Buying a Home Has Never Been Easier
Now that you know the answer to the question “What does contingent mean when selling a house?”, you can start buying your first home. And luckily you’ll have the knowledge and power to make the right decision.
If you enjoyed this article, check out the rest of our blog for more related posts!
Read More: 9 Signs That You Need a Bigger House.