It can be hard to make your offer on a new property competitive. Home prices are already very high. A major part of the problem is that corporations are buying homes. Many of these corporations will then outbid individual buyers, who can’t afford to pay tens of thousands of dollars over the asking price.
In some cases, people will try to make their offers more competitive by removing contingency clauses. Sellers like this because it removes a potential hurdle that could prevent the transaction from going through. For example, if you’re trying to buy a house, you may remove the home inspection contingency. Even if the home fails the inspection, you still have to buy it.
Fewer protections for buyers
As you can imagine, this is certainly a risk. Contingency clauses are there to provide different protections for buyers. In addition to a home inspection contingency, you may have a home loan approval contingency. If you don’t get final approval from the bank, then you can walk away from the purchase without penalty.
But removing these contingencies, although it does make your offer more attractive to some sellers, means that you are basically trapped in that offer. If you don’t get final approval for the loan, you still have to buy. If there are significant issues with the house that will be very expensive to fix, you simply have to pay for those fixes in the future.
That’s not to say that it can’t work. Some people remove a contingency clause and then have no trouble with the transaction, so they feel like it is a good idea. But it is important to know both the pros and cons as you weigh all of your legal options during a property transaction.