If there’s one thing you want to offer a seller when bidding on a home, it’s a clean offer. In other words, you want to make a bid with as few contingencies as possible.
The law put contingencies in place in order to protect buyers. The number of contingencies you can put on a home is honestly endless. But, the longer the list, the further back the seller moves. You may have a hard time finding a seller willing to accept your offer if you have too many conditions on the offer.
The Common Contingencies
Now just because we suggest making a clean offer, doesn’t mean you should ignore the important contingencies, if they apply. You may have a situation where you need one or two contingencies and that’s fine. Just know that the fewer contingencies you ask for, the more likely the seller may be to accept your offer.
The most common contingencies include:
- Financing contingency –If you need a mortgage to buy the home, the financing contingency can help you in case your financing falls through. You get a specific period to clear up any financing issues. After that date, you are bound by the contract and stand to lose your earnest money if you don’t buy the home.
- Inspection contingency – It’s wise to pay for an inspection on a home you might buy. This report lets you know potential issues with the home. You can then use that period to decide if you want to buy the home as is or negotiate with the seller. If you are within the contingency period, you can walk away from the purchase too.
- Sale of home contingency – If you have a home to sell before you can buy the new home, you may need the sale of home contingency. Like the others, you get a specific period of time to sell your home. If you don’t sell it, you have the option to back out of the contract before the period ends.
The three contingencies above help you the most. They are common because without a mortgage, you can’t buy a home and who wants to buy a home that has major issues? Beyond those contingencies, though, there are many others, which the seller may see as a nuisance.
- Neighborhood review
- Lead-based paint contingency
- Roof inspection
- Radon, mold, or asbestos inspection
The list can go on and on. With each additional contingency, sellers may assume that you aren’t serious about buying the home. The more ‘ways out’ that you have, the less reliability you pose to the lender as far as buying the home.
The last thing a seller wants to do is take a chance on you backing out of the sale of the home. Many sellers would rather take a chance and wait for the right offer than take a chance on wasting time on your offer that gives you many ways to back out of it.
If you are serious about buying a home, consider providing a clean offer. If you can’t make the offer completely clean, limit your contingencies. This gives the seller reassurance that you are going to buy the home in the end.