Should I Accept a Contingent Offer for My House in St. George?

Accepting a contingent offerWhen you list your home for sale in St. George, you will likely get more than one offer, thanks to a growing and competitive real estate market. If you get a contingent offer, do you know how to respond? This post will help you determine if you should accept an offer on your home if it includes contingencies. 

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What is a contingent offer?

First, let's talk about what a contingent offer is, and what the most common contingencies are. Contingencies in a real estate offer refer to conditions or requirements that must be satisfied for the sale to move forward. These conditions are typically outlined in the purchase agreement and provide a safeguard for both buyers and sellers.

In theory, an offer can include just about any contingency, but most of the time buyers will include one or more of these common contingencies:

  • Inspection contingency: A contingent offer often includes a clause for a home inspection. The buyer has the right to hire a professional inspector to assess the condition of the property. If significant issues are uncovered, the buyer may request repairs or negotiate the sale price based on the necessary fixes, or back out of the purchase if the issues revealed are too significant. 
  • Financing contingency: Many buyers include a financing contingency in their offers, stating that the purchase is contingent upon the buyer securing a mortgage. If the buyer fails to obtain financing within a specified period, the deal may fall through.
  • Home sale contingency: In some cases, a buyer may make an offer contingent on selling their current home. This type of contingency can introduce uncertainties into the selling process, as the buyer's ability to purchase is tied to the successful sale of their property.
  • Appraisal contingency: An appraisal contingency allows the buyer to back out of the deal if the appraised value of the home is lower than the agreed-upon purchase price. This safeguards the buyer from overpaying for the property. It is also required by lenders in most cases, so it's one of the most common contingencies you will see. 

Benefits of Being Open to a Contingent Offer

We know that it may seem simpler and more straight forward to only consider offers without contingencies, but being open to contingent offers comes with some advantages. 

Expanded Buyer Pool

Accepting a contingent offer can attract a broader range of potential buyers. For example, buyers with a home to sell may be more inclined to consider a property that accepts contingent offers, increasing the chances of finding the right buyer. Being willing to accept a contingent offer doesn't mean you have to, but it does extend the list of potential buyers to make it more likely that you can find the right fit.

Closing Date Flexibility

Contingent offers often come with flexibility in closing dates. Sellers may be able to negotiate a timeline that aligns with their preferences, providing a smoother transition to their next home. Consider whether this advantage may be worth the increased complexity of the escrow process.

Negotiation Opportunity

Contingent offers provide room for negotiation. Sellers can leverage the contingencies to negotiate terms that are favorable to them, such as specifying a shorter inspection period or setting a cap on repair costs.

Potential for a Higher Price

Perhaps the greatest advantage is the potential to command a higher sales price. In competitive markets like St. George, buyers are often willing to pay a premium for a home they desire. Accepting a contingent offer with a higher sale price can be appealing, potentially offsetting the risks associated with the contingencies.

Potential Drawbacks of Accepting a Contingent Offer

There are some potential cons to accepting a contingent offer, so factor these in as you decide how to move forward. 

Uncertainty

Contingencies introduce a level of uncertainty into the selling process. If the buyer's conditions are not met, the deal may fall through, leading to delays in the sale of the property.

Risking Backup Offers

While under contract with a contingent buyer, you may miss out on other potential offers. If the buyer's contingencies are not satisfied, you may need to restart the marketing process, potentially at a less advantageous position.

We can help you evaluate each offer individually to consider whether it's the best fit for your goals. We will carefully review the contingencies outlined in the offer, and then consider the feasibility and potential impact of each condition on the sale. If needed, we can negotiate terms that are reasonable and fair to both parties and help you enjoy a successful sale. Contact us any time to learn more about selling your home in St. George

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