Selling a House With No Contingencies

Types and functions of contingencies

Contingencies safeguard both the buyer and seller by allowing either party to withdraw from the agreement if certain conditions aren’t met. They help protect the buyer from unknowingly purchasing a home that needs significant repair or paying more than the property is worth. For the seller, contingencies prevent getting locked into a prolonged agreement.

The current seller’s market — marked by low housing inventory, rising home prices, more people working from home, and buyers seeking solutions to cope with inflation — may lead to fewer contingencies and create an ideal environment for selling a house without them.

Here are some common types of contingencies that sellers may encounter:

Inspection contingency

The American Society of Home Inspectors defines a home inspection as “an objective visual examination of the physical structure and systems of a house, from the roof to the foundation.”

An inspection contingency stipulates that the buyer has the right to order a home inspection by a certain deadline and can exit the deal with their earnest money if serious, previously undisclosed issues are discovered. A buyer can also ask you to fix certain problems, request that the seller offer a repair credit, or renegotiate the purchase price based on the inspection.

Sellers also may consider a pre-listing inspection and fix anything that may be off-putting to potential buyers to help in selling a house with no contingencies.

Appraisal contingency

Most buyers need a mortgage to purchase a home, and the lender of that mortgage will require an appraisal by a third party before closing to ensure that the buyer’s offer reflects the actual value of the house. The appraisal contingency stipulates that If the appraisal comes in under contract value, then the deal can either be renegotiated or abandoned.

Financing contingency

When a buyer includes a financing contingency in their offer, they are essentially setting a condition that must be met for the contract to proceed. This contingency allows the buyer to back out of the purchase without penalty if they are unable to secure the necessary mortgage to finance the home.

Here’s how it works:

• Inclusion in offer: The buyer includes a financing contingency in their offer, which is a clause specifying that the purchase is contingent upon them obtaining a mortgage.
• Mortgage application: Once the offer is accepted, the buyer applies for a mortgage and goes through the loan approval process.
• Outcome: If the buyer is unable to secure the mortgage due to issues such as poor credit, insufficient income, or appraisal problems, they can exercise the contingency. This means they can cancel the contract without facing legal or financial penalties.
• Protection: The financing contingency protects buyers from being forced to complete the purchase if they cannot secure financing, ensuring they don’t lose their earnest money or face other repercussions if their mortgage application falls through.

For sellers, understanding this contingency is crucial, as it affects the security of the transaction and may influence the decision to accept or negotiate offers.

Home sale contingency

Sometimes, buyers can only afford to buy a new house if they sell their current one first. In these cases, they might include a home sale contingency in their offer. This means that the sale of your house will only go through if they manage to sell their own home.

The contingency protects the buyer by making sure they don’t commit to buying your home unless they can use the money from their current home sale to finance it. If their home doesn’t sell in time, they can back out of the deal without any penalties. For you as a seller, this means there’s a bit of uncertainty since the sale of your home depends on the buyer’s ability to sell theirs.

If a buyer’s up against a dozen other offers, everything that they can do to remove an obstacle is just another opportunity to prevail.

Selling a house with no contingencies

Whether you set out to avoid contingencies from the beginning, or a bidding war makes negotiating a contingency-free contract an option, here are some routes for selling a house with no contingencies:

Attract multiple offers and then ask buyers for their highest and best

If you get multiple offers on your home, you can ask buyers to submit their highest and best bids. This means you’ll be looking for the strongest offers with few or no contingencies. Requesting “highest and best” indicates that you have several options, so buyers will need to present their most competitive offer to win the home. This might involve offering a higher price or waiving contingencies to reduce your risk as a seller.

Siwiec explains, “When buyers are competing with many other offers, removing obstacles can make their offer stand out. This might mean dropping contingencies to simplify the deal, even if it means not offering the highest price.”

Sell your home as-is

One way to minimize contingencies from the start is to sell your home “as-is.” This approach signals to buyers that you’re not willing to make any repairs, even those identified during an inspection.

This strategy might attract investors or flippers, who often make all-cash offers. An all-cash offer could eliminate appraisal and financing contingencies. With the right price and effective marketing, you can attract buyers who are comfortable with a sale that has no contingencies.

Request a cash offer on your home

If you list your home and hope that a traditional buyer will make a cash offer, you might be waiting for a long time, as most buyers need a mortgage. Instead of just hoping, you can actively seek out a cash buyer who is interested in purchasing off-market through an online platform like HomeLight’s Simple Sale.

Simple Sale is a fast and free HomeLight platform that offers competitive all-cash offers for your home. It compares cash offers with potential listing prices and recommends top-rated local agents based on transaction data.

Key features of Simple Sale include:

• All-cash offer in 24 hours
• Fast closing in as few as 10 days
• No agent commissions or hidden fees
• Sell as-is with minimal repairs
• No need for marketing, staging, or showings

Using HomeLight’s Simple Sale can simplify your home sale with a quick, all-cash offer. It eliminates the wait for traditional buyers and provides a straightforward process with no hidden fees or extensive repairs needed.

Get a pre-listing inspection and disclosure packet to address contingencies

With a pre-listing inspection, you pay for a certified inspector to examine your home and identify any issues. While it doesn’t guarantee that buyers will waive their inspection contingency, providing the inspection report and repair receipts can help prevent surprises, reassure buyers, and reduce the chance of the inspection contingency jeopardizing the deal.

However, a pre-listing inspection means you must disclose any issues discovered, which could affect your home’s listing price.

Navigate contingencies with your agent’s expertise

The majority of home sales will include a contingency of some kind, as buyers seek to protect their interests. The fewer roadblocks on the way to closing, the better. When in doubt, working with a top local agent can help make navigating the complexities of contingent offers more manageable.

Header Image Source: (Matt Addington / Death to the Stock Photo)