On this episode, we will be covering ‘all things contingencies’ and why it is part of the most important document in the home buying process.
As a homebuyer, you will eventually reach a point where you have to make an offer on a house. Your realtor will walk you through how to do this and understand everything that goes into it, including contingencies.
Your purchase agreement is a residential real estate contract which lays out all the instructions of the transaction, and a major item within this contact is the Home Buyer’s Contingency.
If not all, most purchase agreements have these.
Let me simply define what a contingency is. By definition it is a ‘future event or circumstance but cannot be predicted with certainty’.
In terms of real estate, a contingency refers to a condition of the Agreement of sale that needs to occur in order for the transaction to keep moving forward.
There are many contingencies that a buyer can choose to include in the purchase agreement, but I will focus on the five most common.
What might look like a perfect and ‘move-in’ ready home, may not be the reality.
If a home inspection contingency clause is included in the purchase agreement, it gives the buyer the right to have the house inspected within a certain period of time, and to cancel the contract within that period if they are not happy with the inspectors findings.
The Financing Contingency
If you plan to buy a home using a mortgage, a financing contingency is super important.
This contingency gives you the time to apply for a loan and receive a loan to purchase the home.
If you are unable to receive the loan, this contingency allows you to look for alternative loan resources, or back out of the deal.
The Appraisal Contingency
The appraisal contingency goes hand-in-hand with the financing contingency. Lenders will require an appraisal in order to grant your loan.
This contingency ensures you are protected if the sale price does not fall in line with the fair market value of the home.
The Title Contingency
Title of a property refers to the legal document that shows who has owned the home, past and present, as well as any liens or judgments that have been made against the property.
This can be included as a contingency, to avoid a buyer taking on someone else’s debt.
The Home Sale Contingency
The home sale contingency is a favourite amongst buyers, and simply means if you cannot find a buyer for the home you are selling within a specific period of time, you may opt out of the deal.
However, sellers don’t always want to see this in offers and may pass for their own assurance.
So make sure you talk to a professional real estate agent like myself to advise you accordingly on the best terms for your transaction.
My job is to make sure you have a smooth process and not worry.
I hope this helps! Thank you for watching.