Your home has been on the market for a while, and you’ve finally received an offer from a potential buyer. The price that they are proposing seems fine, but there are also some “what ifs” or contingencies included in the contract that need to occur in order to make things work.
These are commonly referred to as contingency clauses – conditions or actions that will need to be met in order for the deal to become binding. It is important to understand these clauses – and that they give you the right to back out of the contract under certain circumstances. You may also be able to negotiate certain contingencies with the buyer.
In a real estate contract, a contingency clause can essentially be written for just about any concern or need. Some of the most common of these include:
- Financing – A financing contingency will give the purchaser time to apply for and obtain financing for the purchase – and, if they are unable to qualify, they will be able to get out of the contract, and receive their earnest money back. This contingency will typically state a certain number of days in which the purchaser has to do this.
- Inspection – An inspection contingency will give the purchaser the right to have the property inspected within a certain number of days, after which they may either negotiate certain repairs or cancel the contract based upon the inspection’s findings.
- House Sale – Although it is not used as much today, the house sale contingency can make the purchase of the current property contingent on the purchaser’s existing home within a certain period of time. In this case, the seller will retain the right to cancel the sale contract if the purchaser’s property is not sold within a certain number of days.
While a real estate contract is a legally enforceable contract, there are various items that may be added such as contingencies. In any case, though, it is absolutely essential that you know and understand what is expected of both parties in such a contract.
Having a competent real estate agent on your side can be helpful as they can walk you through the transaction and assist you with the process, answering questions along the way, Call us.