If you’re a first-time home buyer, it’s essential that you understand contingencies. Many people who have never bought a home for themselves don’t understand all of the contingencies that they’re able to request when they make an offer on a home, but having these contingencies could save you from buying a home that has some major flaws that you weren’t aware of when you put in your offer.
Home inspection contingency
This is by far the most common and well-known type of contingency in a real estate purchase, and you shouldn’t by a home without it unless you’re really familiar with what to look for when buying a home. The home inspection contingency allows a potential purchaser of a home to make an offer but still back out if some kind of major problem with the house is found. For instance, if you put an offer on a house that looked beautiful, but the inspector found $30,000 worth of damage to the foundation, you would be able to back out of the offer or put forth a counteroffer that took into account the amount of money you would have to invest in the house.
Other common contingencies and how they protect the buyer
Some of the other common contingencies that people include are the home sale, financing, appraisal and title contingencies. When any one of these contingencies aren’t met by a certain date, it lets the buyer walk away and still get the earnest money back. Buyers need to keep track of these dates, and these clauses need to be properly inserted into the offer. That’s why some people rely on an attorney to ensure that everything is done correctly.
While having a list of contingencies can make your offer less desirable to the home seller, you can still make a strong offer by doing things like getting pre-approved for a loan and offering slightly more than what the seller listed it at. Buying a home is a big decision, and it’s worth taking the extra time to understand the contingencies available so that you get the house you were expecting.