Real estate contingencies have become quite common today. To start with, financing contingencies can help sellers secure a suitable buyer. As a home seller, you may be presented with multiple offers to choose from. One thing that’s often recommended when reviewing offers from buyers is to select the ones with a pre-approved loan or cash. Pre-approved buyers are less likely to be burdened during the real estate transaction. The only major issues you may experience when dealing with pre-approved buyers are lenders who refuse to provide financing because the property doesn’t meet their requirements or a change in the buyer’s financial status.
Home Inspection Contingencies
A common contingency in the real estate industry dictates that buyers have a right to a home inspection. This doesn’t mean that the buyer can demand repairs to be done when issues are identified after inspection. Some contingency clauses can explain what should happen when material issues are discovered. There are contracts that even limit the seller’s obligation to repair the property.
As the seller, you need to know how to deal with these inspection contingencies. For instance, if your property has repair issues and you’d like to sell it as-is, you must disclose it to the buyer. The law demands that any major problems that exist in a property and are discovered by the seller during the inspection must be communicated to potential buyers. The main advantage of disclosing issues in the property early enough is that it gives the buyer confidence in the property being sold. If there are smaller problems uncovered during the inspection, you can agree to renegotiate the price with the buyer or kill the deal.
Contingencies That Involve Selling the Buyer’s Home
A common contingency that exists in many real estate transactions involves the sale of the purchaser’s home. For instance, the buyer might enter into an agreement with the seller that they’ll only buy the property if they first sell their own home. This has its drawbacks because as the seller, you aren’t aware of when the buyer’s property will sell. This means that your property can be tied up for weeks, or sometimes months. Be very cautious about such contingencies as it may require you to move your property off the market while you don’t know when the buyer will close the deal.
Protect Yourself
When it comes to real estate contingencies, make sure you understand all that’s at stake and protect yourself in every situation. Real estate transactions can be extremely complicated and that’s why it’s important to review the agreement thoroughly and ask questions when in doubt. For instance, if you have a contingency that involves the sale of the buyer’s property, make sure it has a kick-out clause. This ensures that you can still market your property and accept a better offer if you come across it.
Work with a reliable real estate agent to help streamline the buying and selling process on your behalf.
