4 Home Buying Contingencies To Consider For Your Contract

Stephen Perrino
Published on October 10, 2016

4 Home Buying Contingencies To Consider For Your Contract

These options will help you back out of a deal for a new home if certain conditions cannot be met.

You’ve found that must-have home in Cranston, RI, submitted a successful offer letter, and now you and the seller are ready to negotiate a purchase contract. But suddenly, you feel a twinge of panic in your stomach: What if your current house doesn’t sell and you don’t have the funds to purchase this new house? Or what if that black stuff in the basement turns out to be black mold, and the sellers refuse to pay for remediation?

Take a deep breath. This is what contingencies, or conditions, are for. Contingencies can be included in your contract and determine what terms must be met by seller and buyer before the contract and sale can become final. They allow each party to back out of the sale, and in some cases, the buyer to get earnest money back if the conditions are not met. Here are four common contingencies to consider for your real estate contract.

Inspection contingency

A home inspection contingency — strongly recommended by most real estate agents — specifies that you will get a licensed home inspector to check the property within a specified period (typically seven days) after you sign the purchase agreement. Once the inspection is complete, you’re allowed to request that the seller make repairs, and it’s up to you to decide what repairs you request. The seller then has the option to make the repairs or counter. If an agreement can’t be reached, buyers can back out of their purchase with their earnest money deposit intact.

Appraisal contingency

Typically, when you buy a house, you put in an offer, and if the seller accepts it, your lender orders an appraisal. But if the appraisal comes in lower than the price you agreed to pay, you’ll have some decisions to make — mainly how to make up the difference in the home price and the loan amount. You’ll have more options if you’ve included an appraisal contingency. Such a contingency usually stipulates that the appraisal must come in within 5% or 10% of the sale price, or sometimes even at or above the sale price. You can try to negotiate with the seller to meet you halfway, but with this contingency, it’s your call to determine whether you’re overpaying for the property and want to back out.

Financing contingency

This clause states that your offer on the property is contingent on being able to secure financing. The main goal of a financing contingency is to ensure that if you can’t obtain a loan, you’ll be able to get your earnest money deposit back. The clause specifies that you have a certain number of days within which to get your mortgage approved by your lender. Many lenders recommend homebuyers allow for up to 14 days.

House-sale contingency

Many buyers need the equity in their current home to purchase a new one. This contingency means that if the sale of a buyer’s current home falls through, so will the sale of the home the buyer wants to purchase. Including a prior-sale contingency in the contract for your new home provides an opportunity to withdraw the offer if your existing home does not sell by a certain date. If you need to sell an existing home before you buy a new one, it’s certainly an option to consider; however, be warned that it’s also one that has been known to scare away sellers Home Buying Contingencies Home Buying Contingencies Home Buying Contingencies Home Buying Contingencies Home Buying Contingencies Home Buying Contingencies Home Buying Contingencies Home Buying Contingencies Home Buying Contingencies Home Buying 

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The above article, 4 Contingencies to Consider for Your Contract”, has been provided by Stephen Perrino. Stephen is a professional, full-time Realtor Perrino Properties Logo 1800x1200with PAIVA Realty Group and has helped many people buy and sell homes throughout the entire Greater Providence area for many years! If you are in the market toBUY or SELLa home, he would love to connect with you and can be reached via email at [email protected] or by phone at 401-206-8907. 

Steve Perrino

Are you thinking of selling your home? I’m very good at marketing homes to sell quickly, and for more money. If you’re a first-time home buyer then you’ll be in good hands. I’ve helped countless first-time home buyers through the entire process of buying that first home! I have a real passion for helping folks buy
and sell homes here in the great state of RI and I would love to connect with you! Offer Accepted Offer Accepted Offer Accepted

I help people buy and sell real estate in the following Providence area cities & neighborhoods: Cranston, Providence, Warwick, East Side of Providence, East Providence, West Warwick, Scituate, Johnston, East Greenwich, Exeter, West Greenwich, Smithfield, Lincoln, North Providence, Pawtucket, Barrington, Tiverton, Newport, Jamestown, North Kingstown, Narragansett, Charlestown, Hopkinton, Warren, Coventry, Richmond, South Kingstown, Middletown, Portsmouth, Little Compton, Cumberland, Western Cranston, Garden Hills, Glen Hills, Woodridge, Hope, Garden City, Potowomut, Warwick Neck, Alpine Estates, Knight Farms, Dean Estates.

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