When shopping for a house, you may come across a few properties that your Realtor tells you have contingency offers on them. What does that mean? Basically, it means that a buyer has made an offer on the property and the seller has accepted it, but before everything is finalized and the sale actually takes place, certain criteria have to be met. Contingencies are generally to allow the prospective purchaser to get their home sold, the buyers mortgage hasn’t officially been approved by the lender, because they have a home they need to sell. All in all, a property with a contingency offer on it may give you the opportunity to still present a successful purchase contract.
What’s the point of these contingencies? They’re basically there to give the buyer a way out just in case something goes wrong. Generally, they also protect the buyer from losing their deposit. While a contingency officer is in the works, the seller can consider their offers, and may be able to accept another offer if the contingent offer is unable to drop their contingency.
Smaller contingencies may be when an offer is contingent upon a home inspection, which means the buyer is waiting to have a professional inspector view and evaluate the property. If something major is found, the buyer can either ask the seller to fix it or can withdraw their bid. Buyers do have the right to wave a home inspection, but no realtor advises this. A good inspection will find anything and everything wrong with a house. Sometimes these things are minor, but sometimes they are major issues like mold of faulty wiring.
An offer contingent upon an appraisal means that the buyer is waiting for a neutral third party (normally hired by the lender) to evaluate the home and provide its fair-market value. This assures the buyer and the lender that they’re not paying more for the property. The lender often will only approve a mortgage for up to the appraised value, not the asking price, so it’s always a good idea to know just how much the home is really worth. If there’s a big difference between the appraisal and what you’re paying, you will have to make up the difference with your down payment.
If you put an offer on a property but don’t have the financing to back it up, you and the seller enter into an offer contingent on the mortgage. This simply means that the seller has accepted your bid and has given you a specific period of time to find a mortgage loan to back up that bid. If you can’t, the agreement falls through and the seller moves on to the next buyer.
It’s always advisable to work with a “buyer broker” that is representing your best interests. Select one free and www.GayRealEstate.com.