What Do Contract Contingencies Mean for the Buyer?
The point of contract contingencies is to give the buyer a chance to set conditions and criteria that they want to be met before they buy a home in the Vail Valley area. Almost anything can be put into the contract as a contingency: title, inspection, appraisal, survey, HOA documents, financing. All of the contingencies will have a date attached. This means that the seller or buyer has until that date to meet those conditions, otherwise, the contract can be terminated.
Contract contingencies help a buyer when they don’t want any surprises by giving them the option to back out if something doesn’t meet their requirements. However, it might not be in your best interest as a buyer to go crazy with all the contingencies you put in your contract. A seller usually wants to sell their home as quickly as possible and adding tons of contingencies can certainly slow the process. Buyers don’t want their offer to appear weak!
Strong or Weak Offers
When a buyer makes an offer on a home, this can be either a strong or a weak offer. The difference between a strong or weak offer is often dependent on the contingencies. A strong offer would have very few contingencies or conditions to be met. A weak offer however would be one with a lot of conditions attached.
A seller might consider an offer weak if the buyer still needs to secure financing, has a home to sell, wants a lot of things done to the home, and is waiting on an inspection and survey. In this case, there are a lot of criteria that need to be met and the buyer can terminate the contract if anything is not to their standards. A strong offer on the other hand would be one where the buyer can buy all cash and without doing an appraisal or inspection. The chances of the contract being terminated here are very low and thereby more favorable for the seller.
Loan Objection Contingency
The loan objection contingency is one of the few contract contingencies that also gives the seller an out. This contingency is usually the last contingency date and is also called the Loan Objection Deadline. It allows the buyer to terminate the contract if they are not happy with their financing. If the bank doesn’t respond to the buyer before the deadline the buyer has two options. The buyer can terminate the contract because they don’t believe they will secure the financing. Or they could ask the seller to extend the deadline. This is where the seller is also provided with an out; they can either agree to the extension or terminate the contract.
Final Thought on Contract Contingencies
Almost every contract will have a few contingencies attached and this is to be expected. A good real estate agent will be able to help you with this, whether you’re a buyer or seller. But buyers should keep in mind that an offer with a lot of contingencies might not be very attractive to sellers. Similarly, sellers who are looking to sell their home in the Vail Valley area very quickly should be aware that a contract with lots of contingencies might take a long time and has risks attached. It’s also important that buyers always provide offers with contingencies in writing to prove they are serious to a seller! Verbal offers or contracts not enforceable and are best to be avoided.
How Can We Help You?
I hope the information you have learned and read in contract contingencies in the Vail Valley area as a buyer or seller is useful, and I can help you in your future buy-in, Vail. Please reach out to me! I want to provide my clients with interesting and up-to-date information so they can make informed decisions. If you think that my expertise and positive attitude might be of service to you don’t hesitate to reach out and contact me.
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Coldwell Banker Global Luxury Specialist
Coldwell Banker Distinctive Properties