Contingency clauses are often used when people make an offer on a home. A potential buyer will put different stipulations on that offer. These have to be met in order for the offer to stand.
An example of this is when there is a contingency regarding a home inspection. The house has to pass inspection in order for the offer to be valid. This doesn’t necessarily mean that the buyer would be uninterested if the house fails the inspection. But they may want to adjust how much money they would offer for that property, knowing that they would have to make repairs or updates.
You can see how a contingency clause can protect a buyer, but some people do choose to remove these clauses. Why would someone do this?
You can create a more attractive offer
The big reason that people do this is that it makes the offer more attractive to some sellers. If the market is very competitive and there are a lot of offers, that can be the difference between someone’s offer being selected or rejected.
In the example described above, a seller may be interested in an offer without a home inspection contingency because it lowers the odds that the deal will fall through. The seller doesn’t have to worry about the outcome of that inspection. Even if they think that the house would pass the inspection, they may still choose this offer – if it is for the same amount of money – just on the off chance that something is wrong.
It’s very important to carefully consider how real estate offers and contracts are written. Those involved need to understand all of their legal options.