Any offer to purchase a home will contain an element of risk. Even an all-cash offer can be problematic. For example, buyers who haven’t converted their equities to cash could come up short if the stock market drops between contract acceptance and closing.
With an all-cash offer, it’s a good idea to ask for verification of liquid funds needed to close within a certain number of days of contract acceptance so that you don’t receive bad news at the last minute.
Most offers include contingencies for loan approval, property appraisal and inspections. Contingencies usually allow the buyers to withdraw penalty-free if a contingency can’t be satisfied.
Offers contingent on the sale of the buyers’ home carry a higher level of uncertainty than offers that aren’t dependent on the sale of another property. That’s why sellers tend to shy away from them. Some sellers won’t consider them at all.
A contingent-sale offer protects the buyers in case their home doesn’t sell within the time frame agreed to in the contract. If the buyers’ house doesn’t sell, they can cancel the contract and usually have their deposit refunded. The seller, unfortunately, is stuck without a sale after wasting time in a contract with a buyer who couldn’t perform.