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Writer's pictureDavid Locke

The Pitfalls of Taking a Contingent Contract: What Sellers Need to Know

When selling a home, it's crucial to evaluate every offer carefully. One common scenario that sellers might encounter is a contingent contract, where the buyer's purchase is dependent on the sale of their current home. While contingent contracts can sometimes work out smoothly, they also come with significant risks. Here are the main pitfalls of accepting a contingent contract and why it might not always be the best decision for sellers.


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1. Extended Time on Market


A contingent contract often means your home will be off the market for an extended period while the buyer attempts to sell their property. This can lead to a significant delay in closing the sale, which may not be ideal if you're on a tight timeline. Additionally, during this waiting period, your home may lose some of its initial market momentum, potentially leading to reduced interest from other potential buyers.


2. Increased Uncertainty


Real estate transactions are complex, and adding a contingency introduces more uncertainty into the process. If the buyer's home doesn't sell within the agreed timeframe, the deal can fall through, leaving you back at square one. This uncertainty can be stressful and may hinder your own plans, especially if you're looking to purchase a new property simultaneously.


3. Market Fluctuations


Real estate markets can be unpredictable. If the market shifts unfavorably while you're waiting for the buyer to sell their home, you might find yourself in a weaker negotiating position. For instance, if home prices drop, the buyer may struggle even more to sell their property, putting your sale at greater risk.


4. Potential for Lower Offers


Accepting a contingent offer might signal to other potential buyers that you're more flexible or in a hurry to sell, which could lead to receiving lower offers than you might otherwise. Some buyers may view your acceptance of a contingent contract as a sign of desperation, prompting them to negotiate more aggressively.


5. Missed Opportunities


While your home is tied up in a contingent contract, you might miss out on stronger offers from other buyers who are ready and able to close quickly. These missed opportunities can be costly, both financially and in terms of timing, especially in a competitive market where cash buyers and non-contingent offers are more common.


6. Complicated Negotiations


Contingent contracts can lead to more complicated negotiations. You may need to negotiate not only the terms of your sale but also the terms related to the sale of the buyer's home. This adds layers of complexity and can prolong the entire process, increasing the chances of misunderstandings or disagreements.


7. Emotional Toll


The uncertainty and potential delays associated with contingent contracts can take an emotional toll. Selling a home is already a stressful process, and the added anxiety of waiting for another home to sell can amplify that stress. It's important to consider the emotional impact and whether you're prepared to handle the ups and downs that come with a contingent sale.


While accepting a contingent contract can sometimes be a necessary step, especially in a buyer's market, it's essential to weigh the risks and rewards carefully. Consulting with an experienced Realtor like David Locke from Locke and Key Associates can provide valuable insights and help you navigate the complexities of contingent offers. By understanding the potential pitfalls, you can make a more informed decision that aligns with your goals and timelines, ensuring a smoother and more successful home sale.


If you have questions about contingent contracts or need guidance on selling your home, don't hesitate to reach out to David Locke at Locke and Key Associates. We're here to help you make the best decisions for your real estate journey.


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The Pitfalls of Taking a Contingent Contract: What Sellers Need to Know


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