The Three Most Common Contingencies in a Real Estate Purchase Contract

Dated: June 3 2021

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What Are Contingencies - Common Contingencies - Vero Beach Homes for Sale

If you're like many people, you've heard the term contingency floated around - but what does it mean in a real estate purchase contract? Here's what you need to know.

The Three Most Common Contingencies in a Real Estate Purchase Contract

Contingencies are conditions that you have to meet for your real estate transaction to go through - and the three most common are related to:

  • Inspections
  • Appraisals
  • Financing

Here's a closer look at each.

Inspection Contingencies

When you buy a home in Vero Beach (or anywhere else), you'll hire a home inspector to check things out. If the inspector discovers any issues that you can't live with, you have three options: You can ask the seller to make repairs, ask the seller to give you a credit, or walk away from the deal (as long as you have an inspection contingency built into your contract).

Appraisal Contingencies

A lender won't give you the money to buy a home unless it feels that it's worth what the seller is asking. To that end, your lender will send out an appraiser to figure out how much the house is worth. If the appraiser doesn't feel it's worth the asking price, the lender will likely refuse to give you the full amount - but it may give you a partial amount. With an appraisal contingency in place, you won't be on the hook for coming up with the rest of the money on your own. 

Financing Contingencies

Nobody wants to be on the hook for hundreds of thousands of dollars if they can't get a mortgage loan to buy a home - and that's how a financing contingency protects you. If you can't secure financing to buy the home, you're allowed to walk away from the deal. Your real estate agent will build this contingency into your contract to protect you in the event that your financing falls through. 

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Chip Boyer

Chip is the IT Manager for Alex MacWilliam Real Estate. He handles the technology needs of the company as well as helping agents in their day to day problem solving.....

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