In a real estate transaction, a contingency clause may be used to provide certain protections. Generally, these clauses help the buyer. A contingency clause protects them from agreeing to something that they would later regret.
For example, perhaps you’ve been looking at a new home and you believe that it’s in great condition. But you haven’t had an official home inspection carried out yet. You may make an offer based on your own observations, but you could make that offer contingent on the fact that the home passes inspection.
This way, if the home doesn’t pass, you can walk away from the deal. If it does, you have confirmation of what you already believed, and you can move forward with the transaction. But either way, you have all of the necessary information to make a wise decision.
Making an offer more attractive
There is one reason why people will remove contingency clauses, however, and give up this form of protection. It’s because they want the offer to be more attractive to the seller.
After all, a seller is focused on the odds that the transaction will go through. This is more likely if there are no contingency clauses. If the amount of money being offered by two potential buyers is the same, a buyer who doesn’t use contingency clauses may have better odds of being selected.
That isn’t to say that this is a tactic you should use, as it may be the wrong decision in some cases. But it does show why it’s so important to understand the legal process and exactly what steps you can take.
