When you purchase a home, chances are, things will go smoothly. While there are bound to be a few problems along the way, you want to minimize the chances of something going wrong as much as possible. The more you know about the contract you are entering into, the fewer problems you may have throughout the entire process. This is why it is a good idea to anticipate potential problems that could occur. This makes it much easier for you to cancel the contract without penalty should something go wrong. These are what are known as contingencies. You will want to include them whenever you make an offer on a home.
An example of a contingency would be as follows. Some buyers choose to purchase a home before selling the one they currently own. Sometimes, even if the home is sold, it is probably still pending and has not yet closed. This situation would call for a contingency where the sale of the home is required to be final before the actual purchase of the new one. This condition would then be written into the offer. Failing to do this could result in two mortgage payments for the buyer instead of one. This is an important part of the offer since no prospect buyer wants to pay for two mortgages at the same time.
There are other common contingencies that should be included when you make an offer. Since you will most likely need a mortgage in order to buy the new home, one condition of your offer could be that suitable financing is successfully obtained before anything is finalized. You also want to be sure the property appraises for the amount you are offering, so this is another condition you would definitely want to include. Also, during the escrow period, certain inspections will most likely be required by you. You could write in another contingency that all inspections must be passed before the sale will take place.
Contingencies are there for your protection. Should you find yourself unable to keep your promise to purchase a home. There are also circumstances that could occur that would make buying property impossible. These situations usually involve money, and since this is commonly the case, you want to be sure you can get out of your agreement without being out a lot of cash. This is an important part of any sale and you should definitely discuss it with your real estate agent.
Your realtor can discuss all types of contingencies with you and advise you on which ones should go into your contract. Your specific situation will be taken into account so as to find the best solution for you should it be needed. Chances are you won’t, but you always want to be prepared just in case.