When you make an offer on a property, you might encounter the term "contingent offer". But what does it mean, and how does it impact both buyers and sellers? In this post, we’ll explain the significance of a contingent offer and how it affects the home-buying process.
What Does Contingent Offer Mean in Real Estate?
A contingent offer in real estate refers to a condition or requirement that must be met before the sale of the property is finalized. In this situation, the buyer agrees to purchase the home, but only if specific conditions, such as securing financing or passing an inspection, are satisfied.
The offer is considered contingent until the specified conditions are met. If any of the contingencies are not fulfilled, the buyer has the option to back out of the deal without penalty.
How Does a Contingent Offer Impact Buyers and Sellers?
For buyers, making a contingent offer allows them to proceed with the purchase while being protected if certain issues arise. If the financing, inspection, or appraisal contingencies are not met, the buyer can choose to cancel the offer without financial consequence.
For sellers, accepting a contingent offer means that the sale is not guaranteed until the contingencies are satisfied. The seller can continue marketing the property and accept backup offers, especially if the contract has a kick-out clause.
What Happens If the Contingencies Aren’t Met?
If the contingencies in a contingent offer aren’t satisfied, the buyer can walk away from the deal without losing their deposit or being legally bound. The seller may have to relist the property, and the deal will be void unless new buyers meet the conditions.
Key Takeaways:
A contingent offer means that the sale is conditional on certain factors like financing or inspection.
Buyers are protected by contingencies, allowing them to back out if conditions are not met.
Sellers can continue marketing the property and accept backup offers.