Buying a house isn’t like any other purchase. There is a lot of legal contracts and documents that go into buying a home. Because a home sale has such a finality about it, several conditions usually go into the contract. In legal terms, these conditions are called “contingencies.” Here’s a look at the most common contingencies in real estate contracts.
The most common contingency found in a home buying contract is the home inspection. A home inspection is for the benefit of the buyer. It gives you a full picture of the condition of your potential new home, as well as bring to light issues that you may want to be fixed before purchasing. Once the inspection is completed, the buyer can negotiate with the seller on any repairs they would like done. The most common contingencies covered in an inspection clause would be mold or termites, which would most likely null the contract so the buyer could walk away without losing any money.
A financing contingency allows you to apply for and receive a mortgage loan before the purchase of the home. This will allow the buyer to pull out of a contract if the loan does not go through for any reason. It’s important for first time home buyers to remember that a pre-approval from a bank does not guarantee funding.
Getting a satisfactory appraisal is usually a condition from the bank on receiving your loan. An appraisal will determine the fair market value of your potential home, so the appraisal contingency makes sure you’re protected if the sale price is much higher than what the market value is.
If you have any questions about the contingencies in your real estate contract, be sure to contact the experts at Riley and Gutman. Real estate attorneys know their stuff when it comes to contracts, so never guess when it comes to the home buying process.