Some years ago I wrote an article about Contingent Offers, which is when a buyer cannot purchase a new property without first selling another property, (usually their current residence).  The general gist of that article (written during a buyer’s market) offered a negative perspective of contingent offers. I suppose that was because such a contingency can be cumbersome with increased risk of flubbing compared to conventional offers.

      Times have changed and so has my opinion of Contingent Offers!  Even though it still seems like a more cumbersome process than other types of offers, the risk may be much less now than it was in a slower market.  Let me explain!

     Since inventories remain at an extremely low level, sellers are fearful that if they sell their home without first procuring a replacement property, they could be left homeless.  That thought is disconcerting at best, so unless they have cash or the ability to purchase the new property without first selling their existing home, they are stuck with the one option of convincing a seller to wait while they sell their home.

     One incentive buyers are using is to make non-refundable deposits to sellers, which can mitigate the risk of a Contingent Offer.  Sellers also realize that once buyers sell their existing home, they bring all cash (or more cash) to the table, eliminating the worry of a low appraisal.  Besides that, homes just sell faster in this market, further reducing risk to sellers.

     Most of these types of buyers are highly motivated, which gives them incentive to sell quickly so the new property doesn’t get sold out from underneath them.  Such contingent properties typically remain on the active list, allowing other buyers to bump contingent contracts.  Contingent buyers are less likely to haggle about repair items identified by home inspections and in fact many such buyers waive the home inspection process altogether because they don’t want to rock the boat.  They seem to be more serious and vested in a purchase than cash buyers who can afford to be more cavalier in their negotiations.

     It is still true that a contingent status in the MLS may create a barrier that other buyers might be reluctant to cross, but now, market- hardened Buyer Brokers help bridge that barrier by aggressively seeking out inventory that shows evidence it can be bumped.  In the past the “contingent” status made such active listings virtually invisible to consumers, but savvy brokers in this crazy market cross those hurdles now with ease.