You would think selling a house with no contingencies depends only upon the buyer’s willingness, but it is possible to receive no-contingency offers on the sale of your home.
As the buyer’s market grows, the number of home sellers does the same. Due to contingencies in purchase agreements, this process of selling and buying a home routinely eats up more time for both parties involved, making it progressively strenuous to sell more houses.
The solution, it seems, would be selling a house with no contingencies. This optimistic response could lead you to wonder what feasibility of a no-contingency offer exists.
Whether you are thinking, “I want someone to buy my house in Milwaukee,” or searching for cash home buyers in Greenfield, here is everything you need to know to reign triumphant in selling a house with no contingencies in Wisconsin.
The Meaning of Contingent Real Estate
Before we delve deeper into what selling a house with no contingencies incorporates, it is crucial to maintain a complete comprehension of what the word “contingent” means in terms of real estate.
You first want to note that each real estate possesses a listing, and each listing is going to have a different status. Here is a quick, comprehensive list of varying statuses you might see:
- Active/For Sale
- Temporarily Off Market
- Coming Soon
Contingent vs. Pending
At first glance, contingent and pending statuses seem very similar regarding the outcome if you see one of the terms listed. Regardless of how slight, it is still vital to recognize the difference. A home that is in “contingent” status is still active. So, the seller could receive new offers from potential buyers.
If the buyer matches the contingencies listed on the home, it officially becomes theirs to purchase. Frequently, the buyer and seller alike will need to meet contingencies for the sale to be completed. We will get into some of the more common contingencies a little later.
The pending status is slightly different because it signifies that the seller is no longer accepting other offers. The home can not hold showings any further for other prospective purchasers.
It may be difficult to tell the difference considering both statuses encompass that someone is actively interested in purchasing the home. To make things simpler, “contingent” status means active while “pending” status means inactive.
The Risks of Selling a House without Contingency
Selling a house with no contingencies does not occur without inherent risks. Homebuyers will habitually waive or remove specific contingencies to help their offer appear stronger to the seller. This may seem like an automatic plus for the seller if anything falls through on the buyer’s end. However, are there dangers of selling a house with no contingencies?
When selling a house with no contingencies, you have to consider all the reasons why you and the buyer are certain no contingencies are needed. Buyers consider waiving contingencies if they are confident that their house will sell without any arising issues.
This confidence typically stems from pre-approval. When waiving contingencies, a problem could manifest during the purchasing/selling process that prevents you from closing the deal.
As a seller, you can note that there will be far fewer consequences for you than for the buyer. However, it is still a great inconvenience to endure the process of reselling a property due to the initial deal never reaching its closing date.
Some unforeseen hassles could include moving back into the home if you already relocated or needing to pay more money out of pocket for property decorators.
When bearing in mind these threats of no-contingency offers, you must understand the substantial contingencies that pop up in purchase agreements.
Contingencies Included in a Purchase Agreement
There are a plethora of contingency types, but the four most important categories are appraisal contingency, inspections, loan approval or loan contingency, and disclosures/reports. The mortgage contingency is also quite common for both the buyer and seller to fulfill. We should consider the details when walking through a purchase contract with any type of contingency.
Now we can take a look at a few to further benefit you in acquiring a better understanding of selling a house with no contingencies.
What happens when the value of a home is not what you expected? The appraisal contingency provides the home buyer with the right to cancel or withdraw their offer if it turns out the property is experiencing undervaluation.
A key example would be the buyer initially agreeing to purchase a home from the seller at $500,000. This agreement appears entirely optimal, but they can back out of the purchase agreement if the house does not meet the appraised value of $500,000 that they are putting forward.
This type of contingency protects the home buyer’s earnest money deposit if undervaluation does occur.
Sale of Home Contingency
The sale of home contingency, also known as the home sale contingency, is moderately akin to the sale and settlement contingency. Conversely, the sale of home contingency unambiguously scrutinizes the buyer’s financial status, noting that the sale will close if the buyer sells their current home.
Home inspection contingencies allow a housing expert to come in and examine the home that you are buying or selling to establish whether or not the house is worth the labor and effort altogether.
The inspector arrives with a checklist of all the elements and features the home should occupy, determining if it meets the standards.
Sale and Settlement Contingency
The sale and settlement contingency states that purchasing a new home intrinsically requires that you effectively sell your old/current home.
This contingency is not nearly as popular today as it was a decade ago, but it is still a valuable one to note as it may manifest during your home buying/selling process.
You can note the similarities between this contingency and the sale of home contingency, but there are a few more details to acknowledge in a sale and settlement contingency:
- Hypothetically speaking, the seller accepts your offer. This offer then immediately receives the pending status. Frequently this is more favorable for the buyer, but not so much for the seller.
- Sale and settlement contingencies could hold a ‘kick-out clause.’ This contingency clause gives you a time limit on finalizing the offer you wish to make on the home. The seller can continue to entertain other developing offers.
Can You Sell a House without Contingencies?
Selling a house with no contingencies is possible and happens more often today than it ever did before. More homebuyers are looking into the details of buying a home with no-contingency offers subsequently due to the market experiencing an increasing number of people striving to be homeowners.
How to Sell a House with No Contingencies in Wisconsin
One recently popularized technique in the real estate market is to vacate your home and get a short-term rental in a location that you are prospectively looking to purchase a house in.
Companies that buy houses in Wisconsin can ensure that your home is appropriately staged, marketed in the most effective way possible, and priced at an appropriate rate. Your home under these conditions will most likely sell in a time frame of 4-5 days and will close in under 30 days. So, you can take in the net proceeds from your sale and use that as a remarkably sizable down payment to be a competitive buyer.
Selling a house as-is for cash is another method to selling a house with no contingencies. This strategy is also the ideal course of action in selling a home as soon as possible.
Using a bridge loan is shown to be incredibly effective in the seller’s market. Essentially, a bridge loan is when you remove the equity from your current home and use that as a down payment to purchase your new one.
Some sellers have also tried the method of requesting rent back. Upfront, let all the buyers know in the marketplace that you are interested in renting your home back from the new owner, so you close on the house in 30 days or so. The new owner turns into the landlord, making you the new tenant. Two to three weeks is traditional, but it can go up to 60 days. Most mortgage lenders, however, will not lend past the 60-day mark.
One more effective procedure would be selling a house by owner. Selling a house by the owner would remove the costs of realtor fees and provide you with the opportunity to sell the home on your schedule. You may need to further negotiate the real estate contract terms to keep the offer status at ‘no-contingency,’ but it is possible if the buyer is looking to purchase fast.
The information around selling a house with no contingencies is practically invaluable as it could evolve the course of house selling forever.
Homebuyers will continue to make no-contingency offers. While on the surface this may seem like a serious bonus for any seller, it is necessary to consider the positives and negatives that come with selling a house with no contingencies.
Once you have a fine grasp on the specifics of selling a house with no contingencies, you are more likely to find success. However, given everything discussed in this article, it is always good to proceed with caution.