Learning The Popular Types Of Contingencies Before Purchasing A New Home

Finding the house of your dreams isn't an easy proposition. You have to perform a lot of research before you can reach your objective. But, once you find the home that you're looking for and you're ready to make an offer to the seller, you instantaneously find out that the same house is being scouted by other buyers as well.

As a result, you find yourself amidst a large bidding war among all the buyers and you have to make your offer stand out to make sure that the seller accepts your offer and not from anyone else. But, how can you do that? Well, that's what we're going to discuss in this extensive guide so that you can be well aware of the circumstances you'll be facing.

The Fundamentals

According to a well-known home inspector in Houston, contingencies help buyers to renegotiate their purchase offers with the sellers in such a manner that it makes it easier for the buyers to close the deal.

For instance, a buyer including a ‘home inspection contingency’ in the offer to the seller means that the buyer will be able to hire a home inspector before purchasing the house. And if any issue is uncovered during the inspection process, then the buyer will have the right to renegotiate either the sale price or ask for repairs from the seller.

Hence, when a bidding war takes place among buyers, especially in a competitive market, certain buyers tend to waive such contingencies. As a result, buyers that waive contingencies become more attractive to the sellers because sellers know that they have more chance of closing the deal with them than other buyers who are reluctant to waive the contingencies.

But, it should be known that waiving contingencies can prove to be a huge risk for the buyer. So, if you're the buyer and you're planning to waive a contingency, always think about it thoroughly & carefully. This is because purchasing a home will be one of the biggest investments of your life and you don't want to botch that. Waiving contingencies can lead to serious financial issues as well, which is why you must understand the risks first.

Knowing The Popular Types Of Contingencies

This is a type of contingency that will allow the buyer to hire a home inspector and thereby survey the home for any damage, before closing the deal with the seller. In case major problems are found with the house, then the buyer will have the right to negotiate with the seller for a lower sale price or ask the seller to make the necessary repairs before the transaction process takes place.

• Financing Contingency

This is a type of contingency that will allow the buyer to cancel the contract, in case the house financing process fails to materialise. In other words, if the buyer is unable to obtain a home loan for purchasing the house, then he or she will be able to back out from the deal without losing the deposit amount.

This is a type of contingency that protects the buyer from any home appraisals. When an offer is accepted by the seller and the home loan process starts, the lender or the financing company will proceed to determine the value of the house that is being bought.

With the help of the appraisal contingency, the buyer will be able to save himself or herself from getting locked into the deal, in case the value of the house turns out to be less than the selling price asked by the seller. Since the lender or financing company will only loan money up to the value of the property, this contingency will protect the buyer from paying more than the market value of the house.

For any additional information, contact our experts right away.