What is a contingent offer? We get this question a lot. Now, this may vary in many states, so let me emphasize we are talking only about the state of Louisiana.
First, what does contingent mean when it comes to a contract for a home? It means it’s conditional. The contract will not proceed without other things happening – like an appraisal, for example.
Secondly, let us tell you that your contract has many contingencies! We are going to explore the most contingencies you will find in a Louisiana purchase agreement.
Inspections. Almost every contract has an inspection contingency. You and the seller will come to an agreement on how many days your inspection period is. We never recommend waiving your inspection period. It’s a bad idea as you never know what will come up when the home inspector gets done.
Contingency #2: Financing
Unless your paying cash for a house – your contract will include a contingency for you to get a loan. Within that contingency, we have to list out the terms of your loan. We will write into your sales contract what interest rate you’re obtaining, what loan type you’re using, and the length of your loan. If you are unable to obtain that loan, the contract may be canceled.
Contingency #3: Appraisal
If you’re using a loan to buy a house, then you will always have an appraisal contingency. The bank will not loan you more money than the house is worth.
Contingency #4: Selling your other home
If you have to sell your home to buy this home, this is another contingency. However, if you have to go this route – we also call it a predicated offer. Not all sellers will accept these types of offers.
Contingency #5: Title work
The sale of your new home is also contingent on the title being clear. The title company will do research and make sure that the property is true owned by the seller and ensure you can get a “clear” title of the house. Without this, you can’t buy the house because you won’t truly own it.
There are many other addendums and clauses that can be written in that would also make the sale have additional contingencies. But those listed above are the most common ones!
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