(Published on - 5/31/2018 9:47:45 PM)
Purchasing real estate is one of the largest financial commitments you'll ever make, and it's understandable to want to protect your investment throughout the transactions process. When you're ready to make an offer on a home, understanding the contingencies within the purchase contract can give you confidence to thoroughly assess the property, and make sure it's a sound investment.
Here are the 5 main contingencies that help safeguard you throughout the purchasing process:
1. A financing contingency ensures you're not on the hook if something goes wrong, or is unacceptable to you concerning your loan. If you're unable to secure a mortgage or the terms/conditions change significantly during the contingency period, you can back out without any penalties.
*This timeline by default in the California "Residential Purchase Agreement" provides you 21 days from acceptance.
2. The inspection contingency provisions give you a set time frame to have any and all professional home inspections done on the property. If any issues are found, you have the opportunity to negotiate with the seller for making repairs, or adjust the sales price to account for the discovered conditions. *This timeline by default in the California "Residential Purchase Agreement" provides you 17 days from acceptance.
3. The appraisal contingency protects you if an appraisers value determination comes in below the contract sales price. When this happens, it's either up to you to make up the difference by securing additional financing, paying it out of pocket or renegotiating the deal. For instance, often times the buyer will request the seller adjust the sale price to the arrived at appraised value. If none of these methods work, the contingency allows you to back out without losing any of your earnest money deposit.
*This timeline by default in the California "Residential Purchase Agreement" provides you 17 days from acceptance.
4. A home sale contingency is very important if you need to sell an existing home to purchase the new one. Essentially, it says your purchase relies on your ability to sell your current property by a specific date. If you haven't accepted an offer in that period, you can opt to receive a mutually agreed to written extension of time with the seller, or withdraw and get your earnest money back.
*This timeline is open to negotiation, but typically 14-45 days.
5. A close of escrow occupancy contingency protects you should you need to move into your new home by a specific time. It gives you contractually guaranteed possession of the home on the date specified.
*This timeline is open to negotiation.
Keep in mind, during the offer process with a seller, all contingency timelines and sale terms are open to negotiation and revision.
Today's housing market is as competitive as ever. Through the past couple decades alone, the required real estate transaction documents have more than quadrupled! Multiple offer and bidding wars can be intimidating. Make sure you employ an experienced, aggressive and dedicated real estate expert to ensure your offer stands out and that you are thoroughly protected throughout the process.
Contact me @ firstname.lastname@example.org or directly 661-510-6072 for consultation services and to buy/sell real estate with confidence.
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