Should You Accept a Contingency Offer?

With current market conditions, there's been an increae in the number of home buyers offering a "contingency" contract to buy your home. But is it a good idea to accept a contingency contract on your home?

For the buyers, the big advantage is obvious -- they don't have to go through with the purchase if their home doesn't sell so they don't risk much.

Buyers do face the disadvantage of incurring costs such of inspecting and appraising the property, but the expense is minimal compared to buying a new home before selling the old one and ending up owning two homes at once.

From the seller's perspective, contingent sale offers aren't usually as desirable because the outcome is uncertain. This is why sellers who agree to a contingent sale offer usually want a release clause written into the contract (often called a "kick-out" here in Central KY).

A release clause allows sellers to continue to market their home and accept other offers in a backup position, subject to the collapse of their primary offer. If the first buyers don't sell their house and can't follow through on their promise to purchase, they have to withdraw from the contract so that the seller can proceed with backup offer.

There is one advantage to the sellers, however, and that is that other buyers are likely to take your home more seriously if there's already a contract in place -- it's just human nature: people want what they can't have. On more than one occasion, I've worked with buyers who immediately took a greater interest in a home once they found out there was already a contingency contract on the home.

So should you accept a contingency offer? Well, you have to ensure, of course, that the offer is structured appropriately, but as long as you dot your I's and cross your T's with the paperwork, I say, "Why not?". As long as you put in a kick-out or release clause, you have nothing to lose and everything to gain.

For more information about buying/selling homes or about Lexington KY real estate, visit my website at www.LexingtonRealEstateSource.com.

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