Buying a home for the first time or the 15th time requires a lot of detailed work. It can even be a bit nerve-wracking for everyone involved. To help protect homebuyers and sellers, contract contingencies have become a common-place way for anyone to work within the deal and get their money back.
What are Contract Contingencies?
Contingencies are built into contracts as a way for prospective homebuyers to cancel the contract without the penalties that were typically incurred. Homebuyers can also get back their earnest money deposits which help lower the risk for buyers when they’re looking to purchase.
Common Contingencies
Detailed contingencies vary from state to state as some take different views of different inspections. Whether it’s roof inspections or septic tanks, before you buy a home you’ll need to research which ones are specific to your state. There are a few common ones that are standard across state lines!
Appraisal
This is when the home is checked out and evaluated to determine what the purchase price will be. So what happens if a home is appraised at a much lower value than originally thought? Buyers may back out of a sale when the lender doesn’t want to approve the mortgage amount.
Home Inspection
Before buying a home, buyers are encouraged to have the home inspected. If the home has issues and the buyers request a repair, the seller must first receive a copy of the home inspection before making repairs. During this stage of the buying process, the buyers want to drop out due to difficulty to repair issues, the home inspection contingency allows them to do so.
Lead-based paint
In many homes built before 1978, lead-based paint was used all over the place. Buyers have ten days to inspect this paint. If it’s found they’re allowed to drop out of the deal through the lead-based contingency.
Wood Destroying Pest Inspection
Who doesn’t love some little neighbors already burrowing into the woodwork? If pests or dry rot is found, the contract will specifically stipulate who needs to deal with the issue. Additional costs may be incurred during this time causing the buyers to can drop out of the deal in general.
Roof Inspection
Your roof does a lot more than just keep the rain off your home! During home inspections, buyers can hire a roofing company to do a complete roof inspection. They may even call off the deal if there’s too much damage. Putting in a new roof or repairing something that’s severely damaged is costly and may not be worth the price.
Sewer Inspection
Sewers can be delicate contraptions and easily susceptible to tree roots or deterioration over time. During a sewer inspection, plumbing companies check out the pipes for damage so buyers can determine if it’s sound before going forward with the sale. Installing a new sewer system is very costly and to put one in right after buying may be too much for homebuyers.
Takeaway
Buying a home is a risky business. Getting all of your inspections done on a new home is one of the best ways to be sure you’re getting exactly what you want. Contingencies offer you an escape route in case the home doesn’t stand up to scrutiny. Take your time and get all of your inspections completed before signing the final papers!