It’s always great to get a contract on your home or investment property – especially if it’s been on the market awhile. You may be tempted to accept a contingent offer, which is a contract contingent on the successful sale of the buyers’ current property within a specified period of time, often referred to as the "contingency period."
Acceptance and Timelines:
If the seller of the new property accepts the offer with the contingency, a timeline is established within which the buyer needs to sell their current home. This timeline is negotiable and is
typically outlined in the contract. The contingency period could be several weeks or months, depending on the agreement between the buyer and seller.
If the buyer's current home doesn't sell within the contingency period, they may have the option to request an extension of the contingency period or they might choose to back out of the agreement altogether.
It's important to note that these contingencies can create uncertainties for both buyers and sellers. For buyers, if their current home doesn't sell within the specified timeframe, they might lose out on the opportunity to purchase the new property. For sellers, accepting a contingent offer means that they might have to wait before their property is truly sold, which can potentially impact their own plans.
Before you accept a contingent offer and go under contract, it is critical to do the following three things:
1 – Check out the property the buyer is selling. Make sure it is priced to sell, see how long
it’s been on the market, and if they’ve had interested buyers looking at it.
2 – Limit the number of days the buyer has to waive the
contingency before terminating the contract.
The last thing you want is another interested buyer finding a different
property while the contingent buyer waits to decide if they can waive the contingency
and continue on with the purchase.
3 – Make sure your Realtor® will continue to market your
property with ads, open houses, and other types of marketing. It is not uncommon for contingent offers to
fall through, and you don’t want to start from square one if your home comes
back on the market.
If you're considering using or accepting a home sale contingency, it's advisable to work closely with a real estate professional who can guide you through the process and help you understand the potential risks and benefits. Keep in mind that local real estate laws and practices can vary, so it's important to be familiar with the regulations and customs in your specific area.
If you have any questions on the risks of contingency contracts or selling your home, please reach out to me at 361.500.2187.
How to Start Investing in Real Estate Part 1
