Contingency clauses are common in real estate transactions. One of the most frequently used clauses is that of a home inspection contingency. This means that the condition has to be met in order for the offer to stand. The potential buyer is saying that they will offer a specific amount of money, but only if the house passes inspection.
Another common contingency is in regard to securing financing. Many people get preapproval from their mortgage lender, but they still need final approval. They will make the offer, but they only have to pay if they are eventually approved for the loan.
But there are buyers who will remove these clauses from their contract offers. Why would they do it?
The offer may be more attractive to the seller
This often happens in situations where there are multiple offers on the same property. The buyer is trying to make their offer more attractive. They don’t want to offer more money, so the only way to give themselves a better chance of being selected is to get rid of the contingencies.
From a seller’s point of view, after all, that makes accepting the offer more of a stable arrangement. There’s no chance that the home will fail an inspection or that the mortgage lender will decide not to approve the loan, canceling the sale. The seller knows it has to go through, and they may value that security.
That being said, it can be very risky for buyers to remove contingency clauses. Those who are going through the home purchasing process need to very carefully consider all of their legal options and the potential ramifications.