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Let’s talk about a contingent buyer, but in order to do this, we must learn about the meaning of contingency and an example of it.
First, what is a Contingency?
By definition, “a contingency is a future event or circumstance that is possible but cannot be predicted with certainty.” The same meaning applies to a contingency relating to real estate.
In real estate, contingency means that an offer to purchase a home has been made and that the seller has already accepted it; however, to finalize the sale, certain criteria or contingencies have to be met. This means that when one includes additional items in a purchase contract, you are essentially giving yourself a way to back out of the contract if a certain event or circumstance occurs.
Relating to real estate, a contingency is a condition that must be met in order for the deal to happen. It is a requirement for the completion of the sale.
Here are some examples of contingencies home buyers include within their contracts:
Home Appraisal – Mortgage lenders will definitely use a home appraisal to make sure that the property being purchased is worth the amount the buyer has agreed to pay. It might be more or it might be less than the purchase price. Given this information, one can negotiate and renegotiate the purchase price to reflect the appraisal, or to back out of the deal entirely.
Clear Title – This is a very important legal document as it does deeper into the history of the house and gives the buyer the information from all the past to current owners of the home. In short, it provides the buyer the official history of ownership. During this process, a title company will check the title to make sure it is “clear” of liens, disputes or other issues. In most cases, the title issues can be resolved between the purchase agreement and the final closing. However, there are some cases where problems occur.
Home Inspection Contingencies – Is one of the most common types of real estate contingencies because it gives the buyer a chance to ensure that the house they are going to purchase is in good order and gives them a chance to back out if they are unhappy with the results. Minor issues like a leaky faucet can be repaired by the homeowner prior to closing but major repairs that are found out from inspection might be a little different, and the burden now goes to the home buyer on how he/she wants to deal with this.
Do note that there is no limit to how many contingencies one can place on a sales contract. The document has mostly standard requirements, but as a home buyer, one can attach as many real estate contingency items as one wishes. It might impact the seller’s decision to accept an offer, but it is your legal right to include them.
A property is contingent when an offer has been accepted by the seller. Contingent deals are considered under contract listings. However, if everything is good, the contingent deals will advance to a pending state.
Do you need more help regarding contingencies or other real estate related issues? Let me buy you a cup of coffee and let’s discuss Crested Butte’s potential. Who do you know that wants to buy or sell a property, let the Heather Woodward Team help you. I can be reached at Heather@TheHeatherWoodwardTeam.com or at (970) 596-1394.