Contingencies are a way for home buyers to learn more about the home and its seller between the time they make an offer to the time the property is officially transferred. These conditions range from financial considerations to home inspections to inclusions of specific property in the sale. The demands buyers can make depend heavily on the market, the popularity of a neighborhood, and the seller's expectations, but there are several contingencies you should at least be aware of before visiting an open house.
Understanding How Contingencies Work
An official Offer to Purchase is a promise made by the buyer to pay a certain amount of money for a given property. It can be made with no stipulations, or it can be made with conditions. Technically, there are no real rules when it comes to contingencies. Buyers may make unusual requests or demands, and it's up to the seller to reject or accept them. Ideally, most sellers are hoping for the unlikely scenario where a buyer pays in cash to purchase the home exactly as it stands. It helps to keep this fact in mind when structuring your offer. Buyers should strive to be fair to themselves, but also fair to a seller who may want to be out of their home as soon as possible.
Financials and Inspections
Most buyers ask for the home sale to be contingent on final financial approval on the off-chance their loan doesn't go through. Buyers who make an offer without this contingency may face extreme penalties if their pre-approval falls through. If buyers are selling their old home, they can request for this sale to be finalized before closing on the new home as well (though this is less common.)
Another standard request is to have a home inspector tour the property. No matter how thorough a potential home buyer is, they can't always tell the structural problems that lurk beyond the walls and floors. From mold to unstable foundations to dated wiring, a home inspection can help save home buyers from having to make major repairs right after they move in.
Titles and Schedules
A title serves as the official chain of who owns the property, and it's often the only tool a buyer has when it comes to establishing official rights. Ex-spouses, neighbors, and lenders may all claim that some or all of the property is theirs, and these disputes often don't become clear until the title has been verified by an impartial third party.
Buyers are also allowed to ask for extra time to make sure that all of their contingencies can be fulfilled. So if the only home inspector in a buyer's area goes on vacation for two weeks or they're backed up with other work, buyers don't have to worry about the sale falling through due to scheduling issues.
Finally, buyers can make requests for buyers based on the state of the property and their personal wishes. One popular example is if a seller has a home theater room, the buyer may request for the home sale to include all of the equipment and amenities. Buyers can also make explicit exclusions before agreeing to the sale of the Rutland North home. So if there's an outdated lighting fixture in the hallway, a buyer may ask for the fixture to be removed before closing escrow. Inclusion and exclusions are a matter of each party's negotiating skills, but these contingencies at least have the potential to be resolved quickly.