Selling your house can be such a hassle. You have to make sure everything looks clean and tidy. You let strangers wander around to look at the house.
And then when it comes down to it, the offer you accept might fall through somewhere along the road. This is a contingent offer.
So how often do contingent offers fall through? Why does this happen? And is there anything you can do to increase your chances?
There’s so much advice out there for the best ways to get a lot of value for your home without much difficulty, so it can be confusing to figure out what the right things to do are. You want to cater to a wide market when selling your home, but it can be difficult when everyone has their own personal tastes. It gets even more frustrating when you need to sell your home quickly.
You need practical advice that helps you get a good offer on your home quickly. Read on to learn everything you need to know about contingency offers.
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What is a contingent offer?
Contingent offers are initial offers that a potential buyer will make on your home. This is the amount of money that your buyers are agreeing to as long as certain conditions are met. Usually, this has to do with the condition of the house or financing issues, but there are many types of contingencies.
Home sale contingency
These contingencies are going to be less common than the others. This happens when your buyers are also trying to sell their old home at the same time that they’re trying to buy yours. These offers usually come with the stipulation that the buyers will only purchase your home if they sell their current home by a certain date.
Home sellers are less likely to accept these offers because the buyers may not decide to sell their old house after all.
This type of contingency means that your buyer must secure financing before they can officially purchase your home. This seems like a fairly simple caveat, but it can lead to some problems. There are many reasons why a lender might deny a request for a home loan.
This means that there are a lot of risks involved for a seller accepting these offers. If something goes wrong and the buyer can’t get approved for financing, then the seller is still left with a house to sell.
An appraisal contingency is usually going to go hand in hand with a financing contingency. Oftentimes, a lender will only approve a loan if the value of the home matches the offer that was given. This means that a professional comes to look at the home and estimate the fair market price.
This is to prevent buyers from overpaying. If the appraisal turns out to be less than the initial offer, a lender can deny the buyer a loan. And in some cases, a buyer might just walk away from the sale completely due to this.
A home title will have a history of the home’s ownership. This is important because it can let a potential buyer know if there are any prior legal claims on the home. In many cases, a buyer will get a title company or a lawyer to look over the title carefully.
This prevents people from selling houses that they don’t actually own. The last thing you want is to buy a house that technically belongs to someone else. If there are any defects or liens in the title, a potential buyer may walk away from a sale.
An inspection contingency is going to be the most common one. It means that the buyer wants a professional inspector to take a look at the home. This is to prevent buyers from inheriting major home issues that might make the home unlivable.
These inspections are usually done within a few days of the offer being made. This is so the buyer can make a decision quickly about whether or not their offer stands. The only caveat is that if the inspector finds something terribly wrong with the house, the buyer has the chance to retract the offer and walk away.
Why do they fall through?
A contingent offer on a house can fall through for a number of reasons. This is going to depend on the type of contingency and events that happen in the days after the offer was made.
An overvalued house
No one likes overpaying for goods or services. Overpaying for a house can be even worse since it can mean thousands of dollars lost.
If the appraiser finds that the house is overvalued, then there are two problems. The first is that the buyer might decide to walk away from the sale because of the high costs. The second is that they might not be able to receive a loan because the house is overvalued.
No clear title
If you’re planning to sell your home, then the best thing you can do for yourself is to have a clear title ready. If you don’t have this, then it can be hard to verify that you have the legal right to sell the house in the first place.
You should also make sure that there are no problems to be found with the title before you put the house on the market. If a lawyer finds any defects or liens, then you may lose your sale.
Trouble getting financing
Again, there are many reasons why a lender might deny a request for a loan. The buyer might have missed some paperwork that needed to be turned in or they might not have a good enough credit score to be approved.
This is unfortunate when it happens, but it’s not uncommon. And unfortunately, there isn’t much that you as a seller can do to prevent this from happening. The buyer is solely responsible for getting their own financing, so it’s up to them to make sure they can get approved.
The buyer can’t sell their current house
The next big issue that you might run into is that the buyer simply can’t sell the house that they currently own.
There could be many reasons for this. The buyer may have decided not to sell their home after all. They might have had a contingency offer of their own fall-through.
There isn’t usually a lot you can do about this once you’ve accepted an offer with a home sale contingency. You’ll simply have to wait a little longer to sell your own home if this happens to you.
The home inspection
If the home inspector finds problems with the house, then you might see your buyer walk away from the sale. It is possible that the buyer will not retract the offer on the condition that the issues found in the house be resolved by you. This can delay your sale, but it won’t force it to fall through completely.
But if your buyer does walk away from the sale, then you might be left with a problem. You might want to consider fixing the issue the home inspector found before trying to sell your house again.
How often do contingent offers fall through?
Fortunately, contingent offers don’t fall through too often. The vast majority of offers make it to the closing table once they’ve been made. You statistically have a 96.1% chance that the offer you’ve accepted will go through without too much difficulty.
This means that only 3.9% of offers fall through for one reason or another. In other words, your odds are pretty good that your sale will go all the way to closing. So you can rest easy knowing that your house will most likely be sold soon once you start getting offers.
So what can you do to prevent it?
Fortunately, there are a few things you can do to avoid having an offer fall through. These include avoiding certain contingencies and making some updates to your house before you sell.
Don’t accept home sale contingencies
The chances of your sale falling through because of this are fairly slim. However, it has the highest risk of all possible contingencies that your buyers might come up with. If something goes wrong with the buyer’s sale, then there’s nothing you can do to prevent your own from falling through.
The only way to prevent this from happening is to not accept any offers on your home that come with this contingency. Think of it as a protective measure in case something goes wrong with your buyer’s sale.
A lot of sellers are already doing this, so as a buyer it can be difficult to make an acceptable offer if you need to sell your house first.
Get your house appraised first
If you want to get a good idea of what your asking price should be, you might consider getting an appraisal done first. This can help you set the asking price for your home. It prevents overvaluing.
This will be helpful if you accept an offer with an appraisal contingency. If you’re already asking for what your house is worth, then you can’t be accused of overvaluing it. This gives potential buyers no reason to walk away from the sale.
This gives you peace of mind that your sale will go through quickly. If it doesn’t, this won’t be the reason for it.
Get your title ready ahead of time
A common scam that occurs is people “selling” homes that don’t actually belong to this. This creates problems when the owner arrives and tries to reclaim their property.
So another good thing you can do for yourself is to prepare your house’s title ahead of time. This will help you prove ownership of the house. It guarantees that you’re actually allowed to be selling the house in the first place.
As a seller, this protects you from getting roped into scams. This way, you can be sure that you’re the only person who has a legal claim over the property.
Make sure your house is in good condition
You may still be able to sell a house that isn’t in perfect condition, but there might be some stipulations. You might get a lower offer if your home needs repairs. A buyer might walk away completely if your home has serious issues.
So it’s a good idea to do as much maintenance on your home as possible before you put it on the market. Not everything has to look absolutely stunning and modern, but you should be sure that the bathrooms are all usable for example.
Get a direct cash offer
There is one way that you can sell your home quickly without ever needing to show it or negotiate. There are a lot of places you can get a direct cash offer on your home. These places then do any renovations they think are needed and then resell the house themselves.
This reduces the hassle that you have to deal with. You don’t have to make sure your house is clean for showings or do a lot of repairs. Instead, an iBuying company will evaluate your home and provide you with a take-it-or-leave-it offer on your home.
This way you can sit back and focus on packing your belongings rather than trying to get a decent offer on your home.
Get a direct cash offer for your home today
You no longer need to ask yourself “how often do contingent offers fall through?” All you need to do is get a direct cash offer for your home and get ready to move.
That’s exactly why iBuyer.com is here. Our experts are standing by to help you with your effortless home sale right now! All you need to do is provide your address and we’ll send you a quote.
You don’t need to worry about showings or repairs, so go ahead and get your direct cash offer from iBuyer.com today!