When it comes to purchasing a home, there are a lot of moving parts involved in the process. One of the key factors that can impact the final outcome of a sale is the use of contingencies in the purchase agreement. In fact, most purchase agreements are contingent on one or more factors that need to be met before the sale can be finalized.
A contingency is a condition that needs to be met in order for the sale to be considered successful. In other words, if the contingency is not met, the sale may fall through and the buyer may be able to walk away from the deal. There are a number of different contingencies that can be included in a purchase agreement, but some of the most common include:
1. Financing: This contingency is often a requirement for buyers who need to secure a mortgage in order to purchase the home. The contingency states that the sale is contingent on the buyer being able to secure financing for the purchase. If the buyer is unable to secure financing, the sale may fall through.
2. Inspection: Another common contingency is the inspection contingency. This contingency allows the buyer to have the home inspected by a professional before the sale is finalized. If any major issues are discovered during the inspection, the buyer may be able to negotiate repairs or walk away from the deal altogether.
3. Appraisal: The appraisal contingency is another common one, particularly when the buyer is getting a mortgage to finance the purchase. This contingency states that the sale is contingent on the home being appraised at or above the purchase price. If the appraisal comes in lower than the purchase price, the buyer may be able to negotiate a lower price or walk away from the deal.
4. Sale of current home: Some buyers may include a contingency in the purchase agreement that states the sale is contingent on the successful sale of their current home. This contingency can give buyers peace of mind knowing that they won`t be stuck with two mortgages if their current home doesn`t sell in time.
Overall, contingencies can be beneficial for both buyers and sellers in a real estate transaction. They allow buyers to protect themselves from unforeseen issues and give sellers a level of certainty that the sale will go through. However, it`s important to work with an experienced real estate agent or attorney to ensure that the contingencies included in the purchase agreement are fair and reasonable for all parties involved.