Should you include a contingency clause in your offer?

On Behalf of | Dec 29, 2022 | Real Estate

When you make an offer on a new home, you have the option to include a contingency clause. In fact, your standard offer is going to contain numerous clauses that are all designed to protect you. But you do have the option to take these out or put them in as you choose, and they are not required.

For example, home inspections are often one of the contingencies that are noted. The offer is only good as long as the home does well on the inspection. If there are issues, then the buyer can either walk away or ask for the seller to make repairs and updates so that the home will pass the inspection.

Reasons to include this clause

The biggest reason to include this clause is simply that it protects you financially. In a lot of cases, there are houses that look completely fine during a standard walk-through, but they have many different hidden issues. A good home inspector will be able to uncover those. When they do, you certainly don’t want to be on the hook for the offer without any adjustments.

In some cases, such as if you have a mortgage, there may be certain requirements. The bank also wants to make sure that they are protecting their investment, so they may require an inspection to be done.

Reasons not to include it

The major reason not to include a contingency clause is that it may increase the odds that your offer is accepted. The deal is simpler, and some buyers are happy to move forward with an offer that doesn’t have contingencies because they know that the deal is going to go through. This is less stressful for them as they look for another house.

That being said, this is usually an option people only consider when the market is incredibly competitive. If you know there are going to be dozens of offers on the house, removing a contingency clause can be a way to give yourself an edge. But you don’t want to do this lightly, as it does remove those financial protections.

Be sure you know about your legal options as you navigate this process.

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