When property owners are selling their property, they approach a REALTOR® who will be in charge of selling the house. There are various ways to bind the contract, and one of the most commonly used is the home sale contingency. So what exactly do we mean by home sale contingency?
Meaning of Home Sale Contingency
A home sale contingency is a clause in the home sale contract that aims at defining the circumstances when the contract is valid. When the homeowner and a REALTOR® enter into a contract with the home sale contingency clause, basically they will agree on the dates by when the house should have been sold. Therefore if the agreement stipulates that the house should have been sold by a certain date, the person selling the house has to make the best efforts to sell the house within that timeline.
This is because if the house is not sold by that date, then the contract comes to an end and the homeowner can decide if to renew or not. There are different forms of home sale contingency contracts. These include the sale and settlement contingency and the general sale contingency.
Sale and Settlement Contingency
Just as the name stipulates, this is a more defined clause which introduces a new condition. This is a form of contingency that is implemented if the buyer hasn’t received and accepted an offer of purchase of the existing home. Therefore the seller can continue to sell the house to another person who is willing to buy the house. There is a stipulation that can be added to this contract which aims at asking the homeowner to remove the clause, but this can only be done within a stipulated period of time. If the buyer can’t remove the contingency within the stipulated period of time, the contract will come to an end. Therefore the seller can accept an offer, and the money can be returned to the buyer.
Home Sale Contingency
If the buyer has already marketed his property and has received an offer at hand with the settlement date defined, the sale contingency is implemented. Therefore the buyer is protected and will wait until the settlement date. Therefore the seller cannot accept any offers for a stipulated period of time. The contract will remain valid as long as the settlement is done within the stipulated dates.
Before the homeowner agrees with the buyer to enter into a sale contingency, it is advisable that the seller investigates buyers home to determine various factors. To begin with, the seller should determine if the house is already listed for sale or not. If the house is not yet listed on sale, then the seller should not waste time with the buyer. Secondly, it is important to determine chances of the house selling. This can be done by confirming the sale price to determine if the value is set correctly. Also, you can check for how long the house has been on sale.