You’re in the market for a home, and it’s competitive. When you find one that you want, you know that you need to make your offer as attractive as possible.
One thing that you’re thinking about is using contingencies in that offer. What impact could this have, and what are the pros and cons?
The contingencies can protect your investment
In an ideal world, you would always be able to use contingencies, and many people do. For example, most home offers are contingent on the home then passing the inspection. If it doesn’t pass the inspection, the buyer is not obligated to go through with the purchase. They can either walk away from the deal or they can ask for changes to be made.
But there are other contingencies that are less common. For example, someone who owns a home may want to put in the contingency that they won’t buy the new home until they sell the one they own.
The downside to doing this is that it can make some sellers a bit wary about working with you. If you have a contingency saying you have to sell the home you own, that just drags the process out for the seller. They don’t care if you have two mortgages or not.
Something like this would work if they weren’t getting a lot of offers and they were desperate to sell. But in a competitive market where they’re getting a lot of offers on a regular basis, odds are that they’re going to choose the offer that doesn’t have these limiting contingencies.
This isn’t to say that you should or should not use them, but you simply need to know the pros and cons as you consider the legal steps you’ll take to buy your home.