Getting To Know Common Contract Contingencies When Buying A House

Including the amount of money you want to put into earnest money deposit is an important part of making an offer on a property. If for example you are going through North Park homes for sale and you find a particular North Park real estate property that you really want to buy, quoting an amount for earnest money deposit is part of the negotiation process. However, there are times when you change your mind about the property for one reason or another. If the reason is not something included in the contract contingencies, you may not be able to get your earnest money deposit back. There are common contingencies that should be included in the purchase contract. These are usually expected, but some people run into trouble by not making sure that they’re included in the contract. Here are a few examples of common contract contingencies and what they are for:

1. Appraisal – Getting a good (or high) appraisal for a property can determine whether you will be able to push through with the purchase or not. Let’s say that your financial situation will only allow you to buy a house if the lender will approve a loan worth $300,000. If the appraisal report gets back and you get a low appraisal on the property you wan to buy, you need to either make up for the difference in amount or just find a different house to buy. In cases like this, it’s useful to have an appraisal contingency attached to the contract so that you can take your earnest money with you should the appraisal come back low.

2. Inspection – It may be wise to have several differnt types of inspections to determine whether the house is safe from different kinds of risks. Should the house fail these inspections, you’d want an inspection contingency present in the contract before you signed it.

3. Lead-based paint – Federal laws allow 10 days to inspect for lead-based paint. This is a contingency that’s commonly attached to contracts already.

4. Loan – Even if you already have a preapproval letter, a lot of things can still happen which may cause you to not qualify for a loan or cause the lender not to approve your loan.

Even at the later stages of closing, things like this could still happen. It’s a smart move to attach this contingency because logically speaking, you probably can’t push through with the purchase without a lender behind you. You’d want to be able to take your earnest money back should this happen. Depending on your situation and on whether the seller will agree or not, there are many other different types of contingency to protect your interest. People who are waiting for their current homes to be sold in order to finance the purchase of a new house may want to attach a contingency stating that the purchase will only push through in the event that the house gets sold at a particular price.

Even sellers may want to attach a contingency, like a contingency stating that they will only sell the house if they are also able to buy the house that they want to buy at that moment. Depending on the kind of real estate market at the time that you’re negotiating the purchase of the house, some sellers may be more willing to accommodate these contingencies in order to be able to sell the house.

RESOURCE BOX Nancy Middletown writes articles about real estat and investment and is passionate about personal finance topics. Check out interesting North Park homes for sale as well as a comprehensive list of North Park real estate

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