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Are there reasons to skip contingency clauses on a home offer? 

On Behalf of | Jan 8, 2024 | Real Estate Law

When buyers make an offer on a new home or another piece of real estate property, they typically use several contingency clauses. A contingency is just a requirement that has to be met before the contract becomes binding.

For example, a buyer who doesn’t yet have final approval on their mortgage may use a contingency clause saying that they have to get final approval or they can walk away from the purchase. They could also use a clause stating that the home has to pass the inspection or they’re not obligated to buy.

You can see how these contingency clauses are used to protect buyers. If they’re not sure that the house is in good condition or that the loan will go through, they want to make sure that they’re not obligated to purchase the house. So why would someone remove these contingencies from their offer?

Making the offer more attractive to the seller

The general reason for this is that the buyer thinks the seller will find the offer more attractive without a contingency clause. They decide to take a risk and remove that protection because they think their offer will be accepted.

For instance, perhaps the market is quite competitive and there are five offers for the same home. They all offer roughly the same amount of money, in line with the market value of the house. But if most of those offers have contingency clauses and one does not, the buyer may choose the one without the contingencies because there is less chance that the deal will fall apart.

That doesn’t mean that you should certainly remove contingency causes or that you have to use them – every situation is unique – but just that you need to carefully consider all of the legal tools you have and how they can be used properly in your specific situation.