Learning about Buyer ContingenciesPosted by Carey Frankel on Monday, October 24th, 2011 at 2:26pm.
After you have found a property that you want to purchase, you will need to put in a written offer to the seller and/or the seller’s agent. Along with the sales price, you may need to include contingencies in your offer.
There are a number of contingencies you may want to include in your offer – some of which are quite standard, and some of which may be specific to your situation.
Here are a few of the contingencies commonly found in sales agreement offers for Nocatee homes:
· Inspection contingency – An inspection contingency is quite common and found in almost every offer, other than “as is” homes. An inspection contingency merely means that you, the buyer, have the option of inspecting the home with the help of qualified inspector and that closing is contingent upon the final report from the inspector. For example, if your inspector finds that the home is in need of a new roof, the sellers can replace the roof, provide you with the money at closing to repair the roof, or refuse to address the roof. As the buyer, you can walk away from the offer if the seller’s response does not satisfy you.
· Financing contingency – A financing contingency means that the sale of the home is contingent upon you securing financing for the home loan. If you are unable to secure a loan, you can walk away from the purchase agreement.
· Insurance contingency – An insurance contingency is a relatively new type of contingency that states that your offer hinges on your ability to obtain the proper insurance on the home. Many homes located in areas deemed unsafe by the insurance carriers are not eligible to receive certain types of insurance, such as earthquake and hurricane insurance. Therefore, you are able to back out of the offer if you are unable to obtain the proper insurance on the property you want to purchase.
· Sell contingency – A buyer may put in a contingency that states that the purchase of the property does not take place until he or she can sell his or her existing property. Most sellers will balk at this type of contingency, so realtors often discourage buyers from including this type of contingency with their offer.
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