IF YOU'RE IN THE PROCESS OF BUYING A HOME, YOU MAY HAVE HEARD THE TERM "CONTINGENCY" BEING KNOCKED AROUND. WHEN MAKING AN OFFER ON A HOME, YOU CAN SPECIFY CONDITIONS THAT MUST BE MET IN ORDER FOR THE DEAL TO GO THROUGH, AND THESE ARE CALLED CONTINGENCIES. IF THESE CONDITIONS AREN'T MET, THEN THE DEAL IS VOIDED.
You should discuss different contingency options with your real estate agent, but in general, the most common are:
This typically means your mortgage needs to go through final approval, and grants you time to complete an application and receive a loan to purchase the home.
Similar to the financing contingency, this means that the final appraised value of the home is close to the offer you've made. If you need a mortgage, the appraisal needs to match your offer since mortgage companies only grant mortgages for market value, i.e., the appraisal. If the home is suddenly appraised at less than the asking price or your offer, you can walk away from the sale.
A home title tracks the ownership and sales records of a property. The title also acts as a record of any potential liens made against the property. If a home title has undisclosed liens like taxes, you now have the option to leave the sale to avoid paying someone else's prior debt.
With this contingency, there can be no major undisclosed issues that pop up on your inspection, and if this happens, the contract is void. Typically, inspection issues are used as leverage for price negotiation.
This contingency outlines a specified amount of time for the buyer of the home to find a buyer for their current home. If they cannot, they can walk away from the sale without penalization. Unfortunately, this contingency can seriously weaken your offer, so if you're pitching in a sellers market where the seller may receive several offers, you may want to exclude it.