Home Buying Contingencies: What Do You Need To Know?

Home Buying ContingenciesWhen purchasing a new home, the agents may negotiate special conditions that must be met into the contract. These are called contingencies, and their purpose is to protect both buyers and sellers. Here is what buyers and sellers need to know about contingencies before agreeing to a contract.

Contingencies are Not Bad

Decades ago, contingencies used to have a stigma because they can lead to contracts being cancelled under certain circumstances. However, contingencies exist to protect both buyers and sellers. They can help prevent purchasing a home that isn’t safe or protect a seller from selling to a buyer who can’t find some a loan. Contingencies are just another checkbox that needs to be ticked before the sale of the home becomes official.

How Contingencies Protect Buyers and Sellers

Whether buying or selling a home, contingencies act as safety nets. Should all the contingencies be met, the transaction will go through as intended, but if the contingencies aren’t met, it allows the either the buyer or to back out of the deal without facing a penalty, depending on who was unable to meet the requirements of the agreement. The buyer faces the biggest penalties, and without the protection of a contingency, buyers would be unable to get their cash deposit returned upon cancellation of the contract. 

Types of Contingencies

There are many different types of contingencies that can help protect buyers and sellers, and some will vary depending on the state the home is located in. Here are some of the ones that may be encountered.

  • Appraisal: Sometimes contingencies are required by parties outside the buyer and seller, and an appraisal contingency is one of them. A home buyer with a home loan may be required to have the home appraised to make sure the home’s value is the same as the loan the buyer will take out.
  • Home Inspection: While it’s always recommended to have a home inspected before officially purchasing it, some contracts may make it obligatory by having it as a contingency.
  • Homeowners Association Documents: Many neighborhoods are part of a Homeowners Association (HOA) that charges monthly or yearly dues and makes special rules the people in the neighborhood have to follow. Providing documents will let the buyer know about the state of the HOA before committing to it.
  • Lead Paint: It’s a law that all buyers have ten days to inspect a home for lead-based paint, as many homes built before 1978 are at risk of having it, and this contingency will help protect buyers from purchasing a home that could be a risk to children and pets.
  • Loan: This contingency is quite common and requires that the buyer be approved for a home loan and protects the seller even if the buyer’s approval is revoked by their lender.
  • Mold and Asbestos: If the general home inspection spots things like mold or asbestos, it’s enough cause to have a licensed professional come diagnose and fix the problem. This sort of contingency will protect the buyer in the event that the seller doesn’t follow through with this.
  • Roof Inspection: It isn’t common for home inspectors go up onto a roof for fear of injuring either themselves or the roof, so a roof inspection contingency would require that a roofing specialist come and inspect it.

These are just some of the different types of contingencies. For more information about other types, be sure to do research or consult a real estate agent.

These are the basics of how contingencies work when purchasing a Turtle Creek home. For more information, be sure to consult an experienced real estate agent who is well versed in contracts and contingencies.

Dylan Snyder is a seasoned real estate professional serving the Jupiter real estate market, Palm Beach real estate market, Palm Beach Gardens real estate market, North Palm Beach real estate market, and the surrouding Palm Beach County area. Along with being a top producer in Jupiter real estate, Dylan's professionalism and expertise in luxury and waterfront real estate sets him and his team of real estate experts apart from the competition. For more information on Jupiter and Palm Beach real estate for sale, contact Dylan at (561) 951-9301.

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