As a buyer, it is essential to comprehend the significance of terms like contingent vs pending. They can have an immense effect on your home search process.
A contingent property is one where the seller has accepted an offer but needs other conditions met before closing. Potential buyers can submit backup offers on contingent listings, but their chances of success are generally slimmer.
1. Contingent offers are more likely to fall through
Consequent offers tend to be more likely to fail than pending ones due to their complexity. Buyers typically include contingencies in their offers as a safeguard against financial loss.
Buyers who include home inspection, appraisal and financing contingencies in their offer are more likely to receive their earnest money back. This is because the house won’t be sold until these conditions are fulfilled.
Finance contingencies are especially vital for buyers without a mortgage already. Without it, buyers could lose the deal and end up stuck in a house they can’t afford.
Sellers who accept contingent offers usually keep the house listed to accept backup offers from other buyers in case the initial buyer’s offer falls through. These will take precedence over any subsequent offers received if and when that second buyer steps up.
2. Contingent offers are more likely to be accepted by the seller
Home buyers who require certain conditions before the sale closes can benefit from contingent offers. These clauses help safeguard them financially in case the sale falls through or provide extra time to find alternative financing sources.
When looking to purchase a home in a high-priced market, it’s essential for buyers to comprehend how contingent offers can help increase their chances of securing the property they desire. They may need to accept less than they would normally accept if their offer on a property that’s priced well over $1 million is accepted by a seller who is willing to assume more risk.
Another scenario where contingent offers can be beneficial is when the seller has been on the market for some time and has multiple offers on their home. In such cases, they may be willing to accept a higher sale price in exchange for an aggressive, contingent offer from a motivated, realistic buyer who can close quickly.
3. Contingent offers are more likely to be accepted by the buyer
Contingent offers are an effective way for buyers to safeguard themselves and boost their confidence that they’ll get the home of their dreams. Furthermore, it helps them prepare for potential issues that may arise along the way.
Real estate contingent offers often contain a kick-out clause that permits buyers to withdraw from their purchase if certain conditions aren’t fulfilled. Such contingencies could include mortgage approval and home inspection results.
In some cases, contingent offers can help sellers sell their homes quickly. Nonetheless, buyers shouldn’t count on a seller accepting such an offer in a slow-moving market.
4. Contingent offers are more likely to be accepted by the seller’s agent
When a buyer makes an offer on a home, they can include contingencies. These clauses ensure the buyer does not lose their earnest money if their purchase doesn’t close successfully.
Contingency offers can be beneficial to both buyers and sellers alike, but buyers should exercise caution when adding conditions to their offers.
For instance, if a contingent buyer must sell their current home to qualify for the new purchase, they might be more prone to backing out than usual.
But, a non-contingent offer can be much more appealing to the seller. This demonstrates that the buyer is serious about purchasing the home and more likely to close on the deal when they find an ideal property that meets their requirements.
Another reason a buyer’s offer might be more likely accepted by the seller’s Cincinnati real estate agents is if they’ve made a good faith deposit. Once the buyer removes their contingencies, however, their good faith deposit could be at risk.
