This is something that does not get talked about very much and you have to be really careful. Contingencies are something that is a part of life. We’re seeing them right now a little bit with the market and what’s happening with what’s going on because there’s a lack of inventory or lack of homes in the market and you have to be careful. You gotta be really careful with what is going on. By the way. it’s the first video in our new office. We moved in a couple weeks ago. So I’m trying it out and I’m working out some kinks, so bear with us.
This is huge because we’re seeing these allow, you said, and this is a really big thing. There are two parts to a contingency really. There’s a lot of the industry that says, “Hey, once the buyers know what this is, so if you’re a seller and you have a buyer coming in your home and offering you an offer, and they say, “Well, it’s contingent on us selling our home.” That means you have to wait until they sell their home and now people get through this in different ways. Some people say, “Oh, once I get an offer accepted on this buyer’s home, then they’re good to go.” We didn’t remove the contingency. But that’s half the battle because they still need the funds to close. The lender’s not saying, “Well you know what, you need to get accepted offer on your home and then you can sell your home.” That’s not what they’re saying. A lender, when they issue a pre-approval that says you have to have the funds, I mean you have to have the funds. That means they have to close on the home and get those funds from that closing in the home they currently live in. Like you are the seller here and you have a buyer coming into your home and saying, “Hey, great, we want to buy this home, but we need to sell this home in order to buy this home and we need the money in order to do that. We need the money from here to in order to purchase this home.”
How it works
So when you have this, great! Someone comes to another party and puts an offer on this home, now it’s pending. That doesn’t mean this party now has the funds to go buy your home and closing your home. That means now they’re starting the pending process with all their contingencies, with inspection appraisal and closing and getting all that done. So it’s a big distinction to make and a lot of sellers don’t know that. I just talked to a seller today actually. This is why it’s on my mind. The real estate Q and A for this week is this and it’s how do these contingencies work? And like I said, you have to be very careful. You have to understand what you’re getting into. There’s not right, wrong or indifferent. You just have to know what you’re getting into as a seller. And a lot of agents are a lot of people that will remove the contingency once there’s a pending offer on this home. So this is your home here, right? So this is your home here. This is the home that your buyer, your potential buyer is selling in order to get the funds here to close on your home. So like I said, there are a lot of people that will remove this contingency, but removing the contingency doesn’t do anything right because they still need the money. Just because you remove the contingency, it doesn’t mean that they can close in your home now all of a sudden. So if this process falls apart at some point during an inspection, appraisal, if someone loses their job or heaven forbid or whatever happens and they can’t close in this home now the other buyers. As I said, there’s another party over here. They have to close in this home. If they can’t close that this falls apart, they don’t get the money here and they can’t close on your home. So the contingency really it runs the course of the entire transaction. So be very wary. Ask your agents, ask your real estate advisers about this when this is happening too because this is super important.
They do not have the money yet. They need the money from this buyer to close on here and they need to take that money and that equity across to your home to go to purchase your home and close on that home. So I hope that makes sense. Let me know what questions you guys have. I know so that is a little confusing, but let me know what questions you have and maybe we can walk through it a little bit. Put your questions in here. I appreciate you guys, your time, your energy, everything because that’s what keeps us doing what we do. So I appreciate you guys a ton. Your feedback and comments, questions, concerns, your time and energy is the most important thing to have. So I appreciate you spending with us. And like I said, always beware. Know how the contingency works, know what you’re actually getting into. It doesn’t matter if you know, because then you know, then you can deal with it appropriately. But like I said, we have someone that didn’t understand how the process is working in a past experience and I told them today kind of how the process really works and there’s kind of two different facets of it and they were blown away. It makes a huge, huge difference when you think, “Oh, we’re good. As soon as this person gets an accepted offer.” No, you’re not. You need those funds in order to close. They need the funds in order for them to close on your home. So know the differences. I appreciate you guys and we will see you very soon.