In a perfect world, selling a house with no contingencies would be the norm. Buyers would come in with rock-solid financing and make a bona fide offer knowing that the price of the home reflects its condition and fair market value. Such a system could shave weeks or even months off the typical home sale timeline.
Instead, most real estate deals only come together after a series of contract contingencies — i.e., escape hatches for the buyer — are lifted. According to the National Association of Realtors, 76% of real estate contracts in May 2020 included some kind of contingency. This typically results in a long and uncertain escrow period.
“A buyer can laden an offer with an engineer’s inspection, a chimney inspection, a furnace inspection, a mortgage contingency, and an attorney’s appraisal. Oh, and a closing that’s going to take place in three months’ time,” shares top-selling real estate agent Mark Siwiec of Rochester, NY. “And the seller? They’ve got two options: accept or reject.”
If you need to sell without contingencies due to a tight moving timeline or to avoid the hassles of an escrow that stretches out 30-45 days, you’ll be in the minority. But you do have options. In the right market, or through a non-traditional sale, it’s possible to attract or negotiate a contingency-free offer. This guide provides a roadmap to 7 specific scenarios where you cruise through contract negotiations with fewer to no contingencies.
Expect pushback on removing these contingencies
As a seller, you despise contingencies, but they’re not just there to make your life difficult. Contingencies exist to protect the buyer. They prevent the buyer from unknowingly buying a defective home or paying more for the property than it’s worth.
In Siwiec’s competitive Rochester seller’s market: “An overwhelming number of offers are being consummated as a result of buyers not having contingencies. It’s outrageous, remarkable, terrifying… You can choose your own adjective,” he jokes.
But — a seller’s market the likes of which we’ve seen in 2020 is the exception to the rule. These are the typical contingencies you can expect a buyer to include:
Home inspection contingency:
The American Society of Home Inspectors estimates that 95% of buyers of existing homes today will elect to have the property professionally inspected prior to closing, up from 75% in the ’90s.
An inspection contingency stipulates that the buyer has the right to order a home inspection by a certain deadline and can exit the deal with their earnest money if they aren’t satisfied with the results. A buyer can also ask you to fix certain problems, request that the seller offer a repair credit, or renegotiate the purchase price based on the inspection.
Home appraisal contingency:
Most buyers will need a mortgage to purchase a home. And the lender of that mortgage will require an appraisal by a third party before closing. Enter the appraisal contingency. If the appraisal comes in under contract value, the buyer can ask you to knock the price down or walk away.
Home financing contingency:
If a buyer can’t secure the mortgage to buy your house, they can void the contract without penalty if they have the financing contingency in place. This is one of the riskiest contingencies for sellers: 35% of delays in closing arise from complications with a buyer’s financing.
Home sale contingency:
According to a recent report from Harvard’s Joint Center for Housing Studies, 61% of homeowners have at least 50% equity in their home. In many cases, a buyer can only qualify to purchase a house when they unlock that equity. A buyer in this position would elect to protect their interests with a home sale contingency, which means the of your house only goes through when their current home sells.
6 ways to sell a home without contingencies
Whether you set out to avoid contingencies from the beginning, or a bidding war makes negotiating a contingency-free contract an option, here are some routes to pursue to sell your home without any contingencies:
1. List in a competitive market where buyers are offering all-cash.
The ability to sell contingency-free often comes down to the temperature of your local real estate market. When you list during a highly competitive seller’s market — either as an intentional strategy to strike while the iron’s hot or because you lucked out with the timing — you could stumble into a situation where a buyer offers you all-cash to compete. While 86% of home buyers will obtain a mortgage to purchase a home, a smaller 14% will come in with a cash offer.
With an all-cash offer, the buyer doesn’t need to obtain financing or complete an appraisal on behalf of the lender. However, it should be noted that a cash buyer could still elect to write in a home inspection contingency.
Tip: Verify proof of liquid funds
A cash offer is only as good as the buyer’s liquidity. To check that the offer isn’t too good to be true, ask your buyer for proof of funds. This could come in the form of a letter from their bank along with a copy of their latest bank statement. However, make sure to do your research and verify that the letter is authentic, not forged, and has been produced by a real bank.
2. Attract multiple offers, then ask buyers for their highest and best.
If you received multiple offers on your home, you can ask buyers for their highest and best bids. A request that buyers bring their “highest and best” signals that you have options and that to win the home — and that a buyer will need to put together their strongest and most compelling offer. That could mean offering you more money. It could also mean waiving contingencies to lessen your risk as a seller.
“If a buyer’s up against a dozen other offers, everything that they can do to remove an obstacle is just another opportunity to prevail,” shares Siwiec. “The competitive spirit kicks in, and logic gets thrown out the window.” Oftentimes, that means buyers will remove contingencies to make the deal better for the seller in lieu of an above listing price offer.
Tip: Organize offers to decide which terms work best for you.
It’s easy to get caught up in the excitement of multiple offers without fully processing what the buyer is offering. Use that excited energy to organize each offer into a spreadsheet where you can outline:
- Offer price
- Contingencies included
- Closing costs
- Closing date
- Net profit
Laying out each offer makes it easier to compare them and decide which terms best fit your needs.
3. Price the home perfectly to stoke buyer interest and a bidding war.
“The best advice I can offer to clients who are thinking of selling is: make sure the property is in pristine condition and make sure that you’re pricing your property appropriately,” says Siwiec. Finding the sweet spot for pricing is “magic,” as Siwiec says. “It’s remarkable, when you price the property appropriately, suddenly buyers become more competitive.”
Jacksonville real estate investor Henry Angeli feels the same way: “I find [the right pricing] brings multiple offers and bidding wars. It can drive the offers above your asking price and without contingencies to ensure the offer is more appealing to the seller,” says Angeli, who has been flipping homes full-time for four years.
Finding the perfect price for your home requires a fair bit of search and expertise. That’s when the expertise of a top agent is essential. If you overprice by even a hair, buyers will be less likely to bite. Underprice it too much, and they’ll assume something’s wrong with it.
Work with your agent to find your home’s true value using a comparative market analysis. From there, lowering your listing price between $10,000 and $15,000 can widen your property’s appeal and chances of igniting a bidding war. For example, if you were planning to list your home for $305,000, lowering it to $295,000 would draw in an audience searching for a home under $300,000.
Tip: Expect pushback in a balanced market.
If you’re listing in a seller’s market, this strategy can work, but in a downswing, buyers might not be as eager to enter a bidding war. In a buyer’s market, undercutting your price could backfire in that buyers see it as a chance to lowball, knowing that your negotiating position is weak.
4. Sell as-is, no inspection — and accept a discount on price.
While the strategies to sell above deal with negotiating the contingencies out of offers to remain competitive, you can also ward off contingencies from the start with a “selling as-is, no inspection” label.
Selling your home as-is with no inspection removes the inspection contingency from the home sale process. Removing that contingency off the bat will typically attract a different set of buyers, namely investors or flippers. Investors and flippers make all-cash offers, which could potentially remove the appraisal and financing contingency as well.
For the right price and marketing strategy, you can find interested buyers who won’t shy away from a contingency-free sale.
Tip: Set the price right to market to a niche of buyers.
Selling as-is with no inspection will come with a trade-off. “The price almost always has to be lower,” explains Indianapolis agent Becky Gluff in HomeLight’s guide to selling your home without an inspection. In her experience, you’ll have to lower your listing price by at least $10,000 to start.
That’s because homes with this label tend to be distressed properties. Oftentimes due to financial circumstances, a seller can’t afford to make the repairs upfront. That requires discounting the property and marketing it to investors, flippers, or buyers who aren’t afraid of a little handy work.
If you work with an investor-friendly real estate agent, they can better connect with seasoned professional flippers or investors in the area who’d be willing to buy your home inspection blind.
5. Request a cash offer on your home from an investor or house-buying company.
If you list your home on the market and cross your fingers that a traditional buyer will pay all cash…well, you could be waiting a while since the majority of buyers need a mortgage. Instead of wishing and hoping on the MLS, you can find a cash buyer who prefers to purchase off-market through an online platform like Simple Sale.
With Simple Sale, you can request a cash offer on your home at any time. Simply tell us a bit about your property and desired sale timeline, and we’ll reach out to the largest network of real estate buyers in the United States on your behalf. From there, we’ll introduce you to the highest bidder with the opportunity to close in as few as 7 days.
Keep in mind: With an off-market cash sale, you can expect to take an 8%-15% discount on price compared to the open market. That’s why whenever you receive a Simple Sale offer, we’ll compare the buyer’s bid to an estimation of what you could receive with a traditional listing supported by a top agent.
Tip: Tread carefully and be wary of scams.
Sellers sometimes opt for cash offers when they need a fast, low-stress sale. However, that need for speed can translate quickly into scams from buyers. Cities like Philadelphia are exploring legislation to curb some “home for cash” companies to keep sellers from being ripped off by their predatory tactics. Some house buying companies will pressure sellers to make the sale or even mislead homeowners — lying to them, that their property is at risk of foreclosure or in need of massive repairs.
Make sure you vet an offer and buyer thoroughly before agreeing to a sale. You can avoid scams by using a reputable platform like Simple Sale, where cash buyers must be vetted and show proof of funds to make offers. Going through a network of buyers rather than requesting an offer from a company directly also widens your buyer pool to include flippers, long-term rental investors, and high-tech iBuyers.
6. You get a pre-listing inspection and provide a disclosure packet upfront.
If selling a house is like playing cards, getting a pre-listing inspection is like starting the round with an open hand. With a pre-listing inspection, the seller pays for a certified inspector to go through the house, top to bottom, and point out any and all issues.
Unfortunately, a pre-listing inspection isn’t a guarantee that the buyer will waive their inspection contingency. But as the seller, you can then present your inspection information as well as any receipts for repairs you’ve made. This can ward off big surprises before closing and give buyers peace of mind that they aren’t purchasing a lemon.
Tip: What’s found in the inspection will need to be disclosed.
With a pre-listing inspection, the cat’s out of the bag on the condition of your home. Anything you learn, good or bad, from the inspection you are now legally obligated to disclose to buyers. Oftentimes, that means issues found should already be priced into the home.
Navigate contingencies with your agent’s expertise
The majority of home sales will include a contingency of some kind. However, you can try your hand at a contingency-free route or mitigate contingencies by favoring all-cash offers, starting a bidding war, or selling off-market through a platform like Simple Sale. None of these routes guarantee the removal of all contingencies, but the fewer roadblocks on the way to closing, the better. When in doubt, consult a top local agent on which contingencies are worth fighting to remove, and which ones you’ll have to accept as part of the deal.
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