Idaho Falls Real Estate Blog

You have your Idaho Falls home for sale and just got an offer. Your Realtor mentions that the offer is contingent on several things. What does this mean?

Whenever you get an offer that has a contingency clause it means that the deal is contingent on some act happening that is described in the clause.  Sometimes it’s as simple as the buyer checking a box in the purchase and sales agreement and other times it’s written in with the other terms and conditions.  Either way you need to make sure you understand the contingency before you accept or reject the offer.

The bottom line with a contingency clause is they are ways for buyers to get out of the deal.  When a buyer insists on having a contingency clause they are telling you they will buy IF…  That “if” could make all the difference in whether the deal will happen or fall apart.

Here are some of the most common contingencies that a seller may have presented to them.

1. Sale Contingency – The offer is contingent on the buyers selling their home first.  This is perhaps the weakest contingency because it relies on the sell of another house that may be overpriced, in a slow market, or not getting a lot of interest.  Many people would only consider accepting an offer contingent on a home selling if the buyers already have a pending transaction in place.
2. Financing Contingency – The sale is contingent on the buyer being able to get a loan.  If they’ve already been into the lender and are approved, you may not have a lot to worry about.  If all they have is a “pre-qualified letter” the buyer could still be a long ways away from getting an actual loan.
3. Inspection Contingency – The buyer will purchase the home only if they approve the inspection.  Usually there are very specific dates and deadlines that must be met.  You will have a very difficult time selling a home without this contingency.

Any time you get an offer with a contingency clause you should consult your lawyer and have it explained to you.  You should only act if you fully understand the potential consequences.