Many real estate purchases involve the use of contingency clauses. These clauses essentially mean that the sale does not have to proceed unless certain stipulations are met. For instance, there could be a contingency clause stating that the buyer is able to walk away from the purchase if the house does not pass an inspection, meaning that the sale is contingent on passing that inspection.
As you can see, these clauses are in place to protect buyers. There could also be a contingency clause related to financing, so a potential buyer could walk away from an offer if they cannot secure a loan and can no longer afford the property. So why is it that some buyers will remove these contingency clauses –essentially removing their own protections from the purchase offer?
It sets their offer apart
The reason people will sometimes do this is because they believe it will give them an edge. If the local real estate market is very competitive, they want their offer to stand out. This is one way to increase the odds that it will be accepted by the seller.
After all, if there is no home inspection contingency clause, it is more likely that the sale will actually go through and the deal will not fall apart. Sellers like this sense of security. If they have two offers for the same purchase price, but only one of them has a home inspection contingency, the seller may be more likely to choose the offer without the contingency to minimize the chances of issues that could derail the sale.
That does not necessarily mean that it is a good idea to remove contingency clauses. It is critical for those involved to understand their legal options.