A contingent offer is an offer to purchase that depends on one or more conditions being satisfied before the sale becomes final. In Arizona, the standard AAR Residential Resale Purchase Contract builds in several contingencies automatically, and each one gives the buyer a defined window to investigate and a defined way out.
What is the inspection period in Arizona?
The AAR contract provides a ten-day inspection period by default, beginning the day after contract acceptance, unless the parties agree to a different length. During that window the buyer can inspect the property and investigate anything that affects their decision.
Before the period ends the buyer either accepts the property as-is, cancels, or delivers a written notice of items they are asking the seller to correct. Missing the deadline is consequential, because the right to cancel on inspection generally expires with it.
What happens if the appraisal comes in low?
When a buyer is financing, the lender orders an appraisal. If the appraised value comes in below the contract price, the lender will only lend against the lower number, which leaves a gap.
The parties then negotiate. The seller can reduce the price, the buyer can bring additional cash to cover the difference, the two can meet somewhere between, or the contract can be cancelled under the appraisal contingency. In competitive markets, buyers sometimes waive part of this protection, which is a real financial risk and should be a deliberate decision.
What is a loan contingency?
The loan contingency protects a buyer who cannot ultimately obtain financing. A pre-qualification is not a loan commitment, and underwriting can surface issues well after an offer is accepted.
This is why sellers weigh the strength of a buyer's lender letter, not just the offer price. A fully underwritten pre-approval carries far more weight than a pre-qualification produced in a few minutes online.
Can I make an offer contingent on selling my current home?
Yes, and it is common for move-up buyers. A home sale contingency makes your purchase dependent on your existing home closing first.
Sellers treat these offers cautiously because the transaction now depends on a second transaction outside their control. Whether yours is competitive depends on how far along your own sale is. An offer contingent on a home already under contract and past inspection is far stronger than one contingent on a home not yet listed.
How do contingencies affect a seller's decision?
Sellers evaluate net proceeds and probability of closing together. A slightly lower offer with fewer contingencies and a strong lender can be worth more than a higher offer carrying more conditions.
This is where representation earns its keep. Comparing two offers is not a matter of reading the price. It means reading the financing, the timeline, the contingencies and the counterparty.
This article is general information about how Arizona residential contracts commonly work. It is not legal advice. Contract terms vary and specific questions should go to your agent, lender or attorney.
