If you’re like many people looking at Midland homes for sale, you’ll hear the term “contingent offer.”
But what does it mean, and how does it affect you?
What is a Contingent Offer on a Home?
A contingent offer means that someone’s made an offer on a home and the seller has accepted it – with conditions. Those conditions are called contingencies, and one or both parties has to meet them in order for the transaction to go through.
Real estate agents put contingencies in place to protect their clients who are buying homes. These contingencies are there so that the buyer can walk away from a deal that’s going wrong – and usually the buyer gets to keep his or her earnest money deposit, too.
Related: What is earnest money?
The Main Types of Contingencies
Most contingencies have to do with:
- Home inspections
Let’s look at each of these more closely.
Home Inspection Contingencies
A home inspection contingency lets the buyer walk away from the deal if the home inspection turns up major issues, in some cases. If the seller won’t fix the issues or negotiate on the home’s asking price, the buyer can exit the transaction with his or her earnest money intact.
An appraisal contingency protects the buyer if the appraisal comes in low, which means an appraiser values the property at less than what the seller is asking for it. Without this contingency, the buyer would be responsible for making up the difference between what the bank will lend and what the seller is asking.
A mortgage contingency gives the buyer a certain amount of time to come up with the money to buy a home. If the buyer can’t secure financing in that time, he or she is off the hook and doesn’t have to buy the house.
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