When it comes to why BHHS Homesale Realty is the best in the business, one thing we pride ourselves on is providing creative solutions to the challenges our clients can have. Although the basics of real estate are simple, the details can be surprisingly complex. Only the most knowledgeable real estate agents have all the tools to handle the unexpected.

One thing many new real estate agents overlook is contingencies.

Contingencies are conditions that must occur for the home sale to keep moving forward. Any number of contingencies can be represented as clauses in your home sale agreement. Contingencies benefit buyers by giving them an "out" in the event something unforeseen happens. There is no equivalent for sellers: The closest thing is declaring a home will be sold "as-is," a sign that no contingencies will be accepted.

When Should Your Clients Use Contingencies?

In general, you should use contingencies when there's a compelling reason or when the market strongly favors your client. All things being equal, sellers prefer to deal with prospective buyers who are motivated enough to pursue the home without contingencies.

For example, if you're putting in a bid on a home that has several other potential buyers, your offer will usually need to be noticeably higher to remain attractive once contingencies are added. Likewise, it is difficult for buyers with contingencies to compete with cash-only bids.

However, that doesn't mean you should never use contingencies. Some contingencies are common, while others protect your client in situations where the property's value could be significantly reduced.

Contingencies are valuable in situations where there are specific, actionable concerns about the property. If a seller denies there are any termites in the home, but you strongly suspect the opposite, you can use a contingency that covers a pest inspection and its results.

Contingencies become less important in situations where sellers are upfront about the possible problems a property has. It's much easier to plan for a plumbing problem the seller has disclosed than to perform inspections and activate a contingency when one is unexpectedly found.

When in doubt, use contingencies. But do it in a precise, strategic way.

What Types of Contingencies Are There?

Some of the most common contingencies include:

1. Inspection Contingencies
   A home inspection is performed at some point in virtually all sales, often as a condition of financing. The inspection contingency covers you in case severe problems are found. Many sellers will choose to walk away from major electrical or plumbing issues.
   
   
2. Financing Contingencies
   Financing is a common contingency that should be used when a prospective buyer is relying on financing. The contingency allows them to "lock in" their stake in the home for a few weeks to months while the financing process moves forward. If financing fails, buyers can back out.
   
   
3. Appraisal Contingencies
   An appraisal contingency is often insisted upon by a mortgage company. The appraisal is used to establish the value of the house—the loan package, in turn, must be aligned with this value. If the loan package is too low or high for the appraised value, the buyer may not be able to move forward.
   
   
4. Title Contingencies
   The title to a home is the official record of who has owned the property. In most cases, a title company will review this and resolve any issues so ownership can be transferred. A title contingency kicks in if problems with the title cannot be resolved.

BHHS Homesale Realty will train you on everything you need to know about contingencies to make your clients successful. Contact BHHS Homesale Realty today to get started.