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An overview of common real estate contingencies

On Behalf of | Apr 21, 2020 | Firm News, Real Estate |

If you are buying a home in Pennsylvania or any other state, there is a chance that you’ll want to add contingencies to your purchase contract. These contingencies allow you to back out of the deal without incurring significant penalties or any penalties at all. Take a look at some of the more common safeguards that buyers include in their offers.

A purchase offer is typically contingent on the home’s condition

The condition of the home can impact a deal in a variety of different ways. For instance, if an inspection reveals significant defects, it may not be worth your time or money to close on the deal. Homes that are in poor condition may be harder to insure, and it may not be possible to obtain a home loan if you aren’t able to get a homeowners insurance policy.

Finally, homes that are in poor condition may be appraised for less than what the seller is asking for. In most cases, a lender won’t make loans worth more than the home is actually worth.

You’ll likely need to obtain a mortgage

It is rare that a buyer acquires a home without the assistance of a lender. Therefore, it is rarely a good idea to commit to buying a home unless you can obtain the capital to do so in a timely manner. It may be possible to stipulate that you’ll walk away from the loan if you don’t get the type of loan that you want or repayment terms that you deem to be acceptable.

The timing of the deal matters

A closing date contingency can help ensure that the deal closes in a timely manner. It can also protect a buyer in the event that a seller gets impatient and decides to accept another offer instead.

If you are involved in a real estate transaction, you may want to consult with an attorney before it closes. Doing so may make it easier to understand your rights and responsibilities after submitting an offer sheet to a buyer.