In real estate, a contingent clause is a condition or set of conditions that must be met before a sale can be completed. A pending clause, on the other hand, indicates that a sale is in progress but not yet finalized.
Pending and contingent are not the same, a pending sale is expected to close while a contingent sale depends on certain conditions being met. Pending offers are typically closer to closing than contingent offers, as the former has been accepted by the seller, while the latter depends on certain conditions.
Contingency plans are important as they provide protection and a plan of action for buyers and sellers in case conditions are not met. Reasons for including contingency plans include financing, sale of current property, and property inspection.
It is important to note that pending and contingent are not the same thing. A pending sale indicates that the sale is in progress and is expected to close, while a contingent sale is dependent on certain conditions being met before it can close.
When it comes to closing a sale, a pending offer is typically closer to closing than a contingent offer. This is because a pending offer has already been accepted by the seller, whereas a contingent offer is dependent on certain conditions being met before it can be accepted.
As a seller, you can back out of a contingent offer if the buyer is unable to meet the conditions outlined in the contingent clause. However, if the buyer is able to meet the conditions and the sale is able to close, the seller is obligated to sell the property.
As a buyer, you may be able to beat a contingent offer by offering a higher price or by waiving certain contingencies, such as a home inspection contingency. However, it ultimately depends on the seller’s decision.
As a buyer, it is possible to outbid a pending offer, but it depends on the terms of the pending offer and the willingness of the seller to accept a higher offer.
A contingent offer works by outlining specific conditions that must be met before the sale can be completed. These conditions can include things like the sale of the buyer’s current home, obtaining financing, or passing a home inspection. If the buyer is unable to meet these conditions, the sale will not go through.
The biggest reason for making an offer contingent is typically to protect the buyer in the event that certain conditions are not met. For example, if a buyer is dependent on selling their current home in order to purchase a new one, they may make their offer contingent on the sale of their current home.
As a seller, you may accept a contingent offer because it is a higher offer than any other offers you have received, or because the buyer is able to waive certain contingencies that you find favorable.
Contingency plans are important for both buyers and sellers as they provide a level of protection and a plan of action in the event that certain conditions are not met. Three benefits of contingency plans include:
Protection for the buyer: Contingency plans protect the buyer by giving them an out if certain conditions are not met.
Protection for the seller: Contingency plans can also protect the seller by giving them a plan of action if the buyer is unable to meet the conditions outlined in the purchase agreement.
Peace of mind: Having a contingency plan in place can provide peace of mind for both the buyer and the seller, as they know that there is a plan in place in case something goes wrong.
There are many reasons why a buyer or seller may choose to include a contingency plan in their purchase agreement. Three reasons include:
Financing: A buyer may choose to make their offer contingent on obtaining financing, to protect themselves in case they are unable to obtain the necessary funding to purchase the property.
Sale of current property: A buyer may also want to ensure that they are able to sell their current property before finalizing the purchase of a new one, and therefore include a contingency based on the sale of their current property.
Property inspection: To ensure the property is up to their standards, a buyer may make their offer contingent on the property passing a thorough inspection.
In a nutshell, understanding the difference between real estate contingencies and pending clauses is crucial in navigating the process of buying or selling a property. Contingencies are conditions that must be met before a sale can be completed, while pending clauses indicate that a sale is in progress but not yet finalized.
Having a contingency plan in place can provide protection and a plan of action for both buyers and sellers in case conditions are not met. Reasons for including contingency plans include financing, sale of current property, and property inspection. It is important to fully understand the terms and conditions of any offer before making a decision.
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