Tag: Buying real estate

What Does Contingent Mean in Real Estate? A Complete Breakdown for Buyers and Sellers

Posted on by Will Sing

In the world of real estate, the term “contingent” can sometimes leave buyers and sellers scratching their heads. Whether you’re navigating the buying process or preparing to list your home, understanding contingent offers is crucial. In this post, we’ll break down what it means to be “contingent” in real estate, how it affects you as a buyer or seller, and what potential scenarios you could face.

What Is a Contingent Offer?

A contingent offer on a house means the buyer has included a protective clause in their contract. This contingency gives the buyer an option to back out of the purchase if certain conditions are not met. Typically, a contingent offer involves the buyer needing to sell their current home before they can finalize the purchase of a new one. Think of it as a step in between “active” and “pending”—the property is not quite under contract yet, and there’s still an opportunity for other buyers to step in.

If you’ve heard the term “bumpable buyer,” it means that the current buyer’s offer is contingent on selling their home, and another buyer could potentially “bump” them out of the contract. Essentially, it’s a state of uncertainty, and another buyer might have a chance to swoop in.

What Does Being Contingent Mean for Buyers?

For buyers, there are two key scenarios involving contingent offers:

  1. You Are the Contingent Buyer: You want to buy a home, but you need to sell your current property first. This makes your offer contingent on that sale, which can sometimes be a hurdle. If another buyer who is not contingent decides to make an offer, you will usually have 48 to 72 hours to either remove your contingency or lose the property.
  2. You Are a Competing Buyer: You want to buy a property that already has a contingent offer. In this case, you can put in an offer, which then triggers the “bump clause.” The original buyer (who is contingent) will have a set amount of time to remove their contingency—if they can, they go from “contingent” to “pending,” solidifying their contract. If they cannot, the seller is free to accept your offer, and the contingent buyer is out.

What Does Being Contingent Mean for Sellers?

If you’re selling your home and receive a contingent offer, it’s important to understand the potential risks. If the buyer needs to sell their current home, this could delay your closing timeline. For instance, if their home takes longer to sell than expected, you might need to extend the closing date, which can be problematic depending on your plans.

It’s also essential to assess the buyer’s preparedness to sell their current property. Are they already on the market? Are they prepped and ready, or are they just starting? The more ready they are, the less risk you’ll face. Given the additional uncertainty, contingent buyers often need to make a stronger offer to compensate for the risk you are taking.

Key Takeaways

  • Contingent Offers: Buyers need to meet specific conditions, often involving selling their current home.
  • Bump Clauses: If you are the contingent buyer, be prepared to act quickly if a competing offer comes in.
  • For Sellers: Contingent offers can mean more risk and longer timelines, but they might come with a higher price to compensate for that risk.

Watch the Full Video: The REAL Difference Between Contingent and Pending

If you have any questions about buying a home or need more personalized advice, feel free to reach out to me. Connect with me on YouTube, Instagram, or Facebook.

For a more detailed consultation or to get started on your home buying journey, schedule a free strategy session here. You can also access my Free Buyer’s Guide to help you through every step of the process here.

Can We Practice Kindness In Real Estate?

Posted on by Living Room Realty

One of my pet peeves in the industry I’ve worked in for the past 18 years is the lack of empathy or compassion when negotiating a real estate sale. I believe that we should always strive to be nice for the sake of being nice. Real estate comes with heavy emotions, on both sides. As an agent representing either side of a deal, you can position yourself to keep a level head, show enthusiasm, check your ego, be like-able, honest and show integrity before you answer your phone and say “hello”.

A little reminder for us agents —-

If you are a buyer’s agent wishing to make a bid on a seller’s home remember: the home your clients wish to buy might be the sellers “baby”. They may have purchased it when it was a dump, given up weekends and holidays to get it done, and sweated blood, tears and have gone through multiple marriage counseling sessions to bring it to market. Don’t be the asshole agent that barks orders to accept an offer within 12 hours of them listing the house. Try instead to be more kind; more empathetic, because being rude will get you nowhere. Show that you are an organized, likeable and patient agent, one that understands that the sellers might want a couple days of market time, and your buyers aren’t going anywhere — they really want the house.

As broker’s we have a vested interest in pairing clients with a buyer that will make a good offer and a fair deal. If a broker feels as if you are difficult to work with, that you’re waving a red flag at day one, they will worry what the rest of the negations might bring. Don’t be an asshole (something I tell my 15 and 18 year old children- practice kindness).

If you are a seller’s agent bringing a new home to the market remember: Most homes are not perfect. You may have hired the painters to help your clients pre-list and stage the home, it’s looking very dialed and swanky (especially the coffee table), but upon closer inspection, the roof is three layers and the sewer is broken. In our current market, it is often the case for seller’s agent to call a buyer’s agent and say, “I have 10 offers in hand and while yours is the highest and the best, and my sellers really do appreciate that you went 100,000 over asking, they do not feel the need to credit you $5000 for the sewer repair. You must take it as-is or we will go to the back-up offer. First, threats don’t feel very nice. I implore all listing agents to have the courage to talk with their sellers not only about the deficiencies in the systems of the home that a buyer would be taking on, but how they would feel in the buyer’s shoes. As a listing agent if you know that the sellers roof is shot, get a couple of roofing bids prior to listing the home so your seller has opinions from professionals. Educate your sellers so they can be prepared to make decisions before you are at the end of your inspection period. Educating sellers makes them feel less blind sighted. My job as an agent is to bring as much finical security to a seller but it’s equally important that I ask my clients to stretch towards a place of fairness and compassion.  Its one of the way we can change the world.

Never underestimate the power of practicing kindness in real estate. Try to see both sides, that’s where the goodness lies. Being kind doesn’t make you a sucker or less business-like in real estate, it allows you to be in a place of integrity.