Which Contract Contingencies Are the Most Important?

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There are some things you should absolutely know about real estate contingencies that are in contracts.

The first type of contingency is the inspection period. Most of us know that the buyer gets 10 days to inspect the property, and they can cancel the deal at any point along the way.

The inspection contingency allows a buyer to walk away.

The second is the financing contingency, which many sellers are not aware of. This means that in the event that the buyer is unable to obtain their financing, they can cancel the contract at any point up to the close of escrow and get their earnest money deposit back.

The third is the appraisal contingency, which is a big trend in our market right now. There is an appraisal contingency written into the contract, meaning the property must appraise for the agreed-upon purchase price, or other agreements may have to be made between the buyer and seller with the sales price.

The fourth one, which is also a big one in today's market, is an offer being contingent upon the sale of the buyer's home. If you get an offer that is contingent on the buyer selling their current home, you want to be sure that they are listing on the MLS with a professional agent to ensure that their home will, in fact, get sold.

If they're under contract, you want to know exactly where they're at in that process. Have they gone through the finance and appraisal processes in their existing transaction? In the event they are unable to close, what will be the plan moving forward from there? Any great agent in your local market should be able to help with this.

If you have any other questions about contracts, give me a call of send me an email. I'd be happy to help you!