Chic vs. Geek: The Art of Contingency

What is contingency, and what do you risk when you waive it?

CHIC (PEARL)

What is contingency? It’s a clause you can include in your offer on a property if there are uncertainties as you head into contract. For example, if a roof inspection uncovers a water leak, a contingency clause would allow you to cancel your offer. What are some of the most common contingencies? Property inspection, loan contingency, appraisal contingency, title contingency, and CID (Common Interest Development) contingency – usually in an HOA. Property inspection contingency is most common during normal times. In the age of COVID, we’ve seen more loan contingency. As real estate pros, we recommend that our buyers AND sellers take advantage of every contingency they can.

GEEK (KEVIN)

What do you risk by waiving contingency? It depends… In this very competitive market, where multiple offers are common, you have to think cautiously. Are you putting in a contingency because the property has unknown issues that may not arise until after the contract is signed? Or are you having doubts about the purchase and want the ability to cancel the contract if you change your mind? From the seller’s perspective, a lower offer with no contingencies may be more attractive than a higher offer with a contingency. Experienced agents can help to guide clients to smart decisions. Contact us if you have any questions about contingency or other contract issues.