Shopping for a new home can be a long and draining process, especially when you keep running into terms you don’t recognize. Like what does a contingent listing mean? Should your offer be contingent? Let’s explore what this standard realty term means.
If a home listing has a contingent offer status, it means a buyer has made an offer and the seller has accepted. The sale, however, won’t be finalized until certain criteria are met. In this situation, the parties can negotiate whether the home will still available for showings, as the seller may want entertain backup offers until the contingent offer either closes or falls through. These criteria could involve, for example, the following three categories: appraisal, home inspection and mortgage approval.
1. Home inspection:
A home inspection gives the buyer the right to have the home inspected by a professional. A thorough inspection will identify certain conditions with the house, and the buyer may request to have those issues addressed before closing.
This contingency allows the lender to hire a third party to evaluate the fair-market price of the home. If the appraised value turns out to be less than the sale price, the buyer reserves the right to back out of the offer.
3. Mortgage approval:
As a buyer, you can’t sign a property sale without showing that you have the money to back up your signature. This contingency protects both the buyer and seller from getting involved in a sale without a proper loan. During this process, the buyer has a certain amount of time to obtain a loan. If the buyer can’t find a lender willing to commit, he or she has the right to walk away with the down payment in hand.