When a home buyer is searching for their dream home, many times they will find a home they want only to discover it is in the contingent status. But what does that mean? When a home is in a contingent status it means that the seller has accepted the offer from the buyer, but certain contingencies need to be met in order for the sale to close.
How long is a home in a contingent status? This will be set in the offer that is accepted by the seller and is normally between 15-90 days. During this time the contingencies attached to the offer will need to be met. It’s important to point out that there is a difference between a contingent property and a pending property. A pending property is one that has already met the contingencies that were attached to the contract and now the property is set to close.
The following are the types of contingencies that you will normally see applied to a contract- especially in a buyer’s market.
Home Inspection Contingency– An important contingency that will give the buyer peace of mind that the home they are purchasing is NOT a money pit and the major structural components of the home are in good working order. A professional inspector will inspect all areas of the home, both inside and out, and generate a report to the buyers. From this, the buyers may find they need to negotiate additional items into the purchase of the home.
Home Sale Contingency– If a buyer has an existing home to sell, they may make their offer contingent on the sale of that home. A request of 30-90 days to sell their existing home or the deal is off, is usually the norm. In a seller’s market, this is not a contingency you’d normally want to make as a seller will normally reject the offer and move on.
Mortgage Contingency– Although buyers should already be pre-approved for their home loan, this is not always the case. If this happens, a buyer may apply a mortgage contingency making the sale contingent on their ability to secure a mortgage to purchase the home or they can back out of the deal. This will ensure they receive their earnest money back if a loan is not secured.
Appraisal Contingency- Both buyers and lenders don’t want to pay more for a property than it is worth, so an appraisal contingency may be applied so that an appraisal is done on the property. If the appraisal comes in lower than the actual buyer’s offer, the buyer can walk away from the deal with their earnest money, or pay the difference in cash at the closing.
Home buyers need to work hand in hand with their real estate team. Your real estate agent is experienced and knowledgeable and will guide you in the process. Here at the Sandi Pressley Team we work with Albuquerque Sellers and Buyers every day and take our fiduciary responsibility seriously. We want you to receive the best offer for your home and home purchase, but also ensure it’s the best investment for your future. Do you have questions we can help answer? Please reach out.
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