Part Two of our Website Blog Series covers contingencies and the importance of measuring your offer(s) based upon some of the most common one. Contingencies are hugely important for our sellers to understand, and we are highly experienced in evaluating and advising our clients on which contingencies could make or break an offer.
Most offers have contingencies — provisions that must be met for the transaction to go through, or the buyer could be entitled to walk away from the deal with their earnest money intact. Contracts with fewer contingencies are more likely to reach closing, and in a timely fashion. Below are some of the most common contingencies:
Home Inspection Contingency
This gives the buyer the right to have the home professionally inspected and request repairs by a certain date — typically within five to seven days. Depending on where you live, you may be required to make home repairs for structural defects, building code violations, or safety issues. Most repair requests are negotiable, though, so you have the option to haggle over which fixes you’re willing to make.
For a mortgage lender www.Brianknowsloans.com to approve a home buyer’s loan, the home must pass appraisal — a process during which the property’s value is assessed by a neutral third party. The appraisal verifies that the home is worth at least enough money to cover the price of the mortgage. Generally, the home buyer is responsible for paying for the appraisal, which typically takes place within 14 days of the sales contract being signed.
Also called a loan contingency or mortgage contingency, a financing contingency protects the buyer in the event their lender doesn’t approve their mortgage. Although the timeframe for financing contingencies can vary, mortgage lenders report that buyers generally have about 21 days to obtain mortgage approval.
Sale of Current Home Contingency
Depending on the buyer’s financial situation, their offer may be contingent on the sale of their home. Usually, buyers have a window of 30 to 90 days to sell their house before the sales agreement is voided. This contingency puts you, the seller, at a disadvantage because you can’t control whether the buyer sells their house in time.
Before approving a mortgage, a lender will require the borrower to “clear title” … a review of any potential easements or agreements that are on public record. This ensures the buyer is becoming the rightful owner of the property and the lender is protected from ownership claims over liens, fraudulent claims from previous owners, clerical problems in courthouse documents, or forged signatures.
These contingencies are standard for most real estate sales contracts, except for the sale of current home contingency which tends to be used more often in strong buyer’s markets. Just remember… contingencies are always negotiable.
Please contact The Cuney Team today and we would love to represent and advise you in the buying or selling of your home!