What I Do for Buyers: Advising You about Contingencies
When constructing an offer, understanding the contingencies involved is of critical importance. A contingency means that if certain conditions are not met after an offer is presented, the buyers may remove themselves from the contract and have their deposit returned.
The most common contingencies are the inspection contingency, the escrow contingency, the financing contingency, and the appraisal contingency.
Inspection Contingency
The inspection contingency specifies the right of the buyer to investigate through various inspections what the condition of the property is. If new conditions are found that relate to health and safety issues, or there items that were not known about when the offer was accepted, a negotiation may take place. If the negotiation is unsuccessful, the buyers may remove themselves from the contract.
Escrow Contingency
The escrow contingency is simply an agreement that a buyer’s property must close escrow before the purchase of the new property occurs.
Financing Contingency
If the buyer is unable to secure the loan they had intended, or that the terms and conditions required by the lender cannot be met, negotiation or removal from the contract may occur.
Appraisal Contingency
If the property does not appraise for the purchase that was agreed to between the buyer and seller, a buyer may request the seller meet the appraised price.
