When purchasing a home in Alpharetta, your real estate agent may ask if you wish to include any contingencies in your offer. A contingency is essentially a condition that must be met or the buyer can walk away from the deal. While contingencies can range depending on the particular circumstance, there are several common conditions you may see.
Here are a few common contingencies you should know about.
If financing is necessary, you will likely see a contingency that states that the buyer must be able to obtain financing or they can walk away from the deal. With this contingency, if the buyer’s financing falls through for any reason, they do not qualify for a home loan, etc., they are not penalized and can leave the transaction.
For sellers, it is important that you look at a mortgage pre-approval letter with every offer. While there can still be many challenges a buyer faces with his or her financing, this letter reduces the risk.
Home Sale Contingency
Another common contingency is a home sale contingency. With this condition, a buyer must sell their current property before they can purchase a new one. Often, the contingency will state a specific time period the buyer has to sell their current property. If the home is not sold within that time, the buyer can walk away from the deal.
While this is a safety net for buyers, it can also hurt their chance of the offer being accepted. If you are in a battle against other buyers for a particular home, you may want to leave this condition out as it may make your offer less desirable.
Another common contingency is an inspection contingency. This states that if any major issues with the home are found during the inspection and are not disclosed prior to placing an offer, the buyer can walk away. With this contingency, a buyer can also state that if an agreement is not made about who will complete all repairs, the buyer can walk away as well.
The appraisal contingency is important if the buyer is obtaining financing to purchase the home. An appraisal determines the market value of the home and helps the bank ensure that they aren’t lending the buyer more money than the home is worth. If the appraisal comes back too low, the buyer may not receive the financing they need to purchase the property.
An appraisal contingency protects the buyer if this happens. You can work with the seller to negotiate a different sale price or you can walk away.
As you place an offer, work closely with your real estate agent. He or she can help you determine if it is a wise decision to include specific contingencies or if it will weaken your offer.
If you have any questions about the buying or selling process, contingencies in your offer, the current real estate market, and more, contact the AlpharettaZen real estate team.