Contingencies are conditions included in real estate contracts that must be met for the sale to proceed. As a seller, understanding when to accept or negotiate contingencies can impact the transaction's success and your interests. This article provides guidance on evaluating contingencies during the selling process.
What Are Contingencies?
Contingencies are clauses that specify certain conditions that need to be satisfied before the sale is finalized. Common contingencies include financing approval, home inspection, appraisal, and sale of the buyer's current home. These clauses protect buyers but can influence the seller's decision-making.
When to Accept Contingencies
Accepting contingencies may be appropriate when they are standard and do not significantly delay the sale. For example, a financing contingency is common and usually necessary for the transaction to proceed. Accepting reasonable contingencies can also make your property more attractive to buyers.
When to Negotiate Contingencies
Negotiation is advisable when contingencies could cause delays or pose risks to your sale. For instance, if a home inspection contingency reveals issues, you may negotiate repairs or concessions. Similarly, if a buyer's sale contingency is uncertain, you might request a shorter timeframe or remove the contingency altogether.
Key Considerations for Sellers
- Assess the risk: Determine how contingencies could affect your closing timeline.
- Evaluate the buyer: Consider the buyer's reliability and the strength of their offer.
- Consult professionals: Work with a real estate agent or attorney to navigate negotiations.
- Prioritize your goals: Decide which contingencies are acceptable and which require negotiation.