Don't Let Real Estate Contingencies Ruin Your Deal! Read This First.
It’s exciting to own a home in Midwest City, Oklahoma. But, there is a massive load of activities that come with the home buying process – from insurance and mortgage to inspection and financing. Due to this, you can easily overlook the critical aspects of your real estate contract. Contingencies often slip out unnoticed in these contracts. Unfortunately, failing to understand contingencies can bring about unbudgeted expenditure and even kill the deal.
Contingencies control the operations of doing business between the buyer and the seller. A contingency is basically a clause in the real estate contract. It describes what the seller and the buyer need to do before moving on to the next level of the transaction. It usually acts as a safety net to protect either of the parties from a failed agreement. When buying a home, it is wise to consult competent real estate agents in Midwest City to understand these contingencies better.
This article explains some common contingencies you are likely to bump on when buying or selling your home in the Midwest City.
Inspection Contingency
It is one of the most important real estate contingencies for buyers. This clause allows the buyer to inspect the home and negotiate remediation and repairs with the seller. Most people check the general condition of the house without doing an in-depth inspection. However, the inspection contingency gives you a right to perform multiple inspections, including lead-based paint, mold, radon, and insect damage inspection. If the inspection uncovers severe issues, you can demand repairs or new terms. The seller can reject or accept the new conditions.
Financing Contingency
It is also called the mortgage or loan contingency. It’s important to elect this clause into your contract if you are buying the home using a mortgage. This contingency gives you ample time to apply for the loan and have it approved. In case you are unable to secure financing, you have the right to back out of the transaction or look for alternative sources.
Appraisal Contingency
Some properties on sale are slightly overpriced compared to the fair market value. The appraisal contingency protects you from such events. It’s good practice to obtain an appraisal before you make any financial commitment to the property. The assessment helps to determine the real value of the home. If you find out that the purchase price quoted by the seller is higher than the appraisal figure, you have the right to renegotiate it. But if they are unwilling to back down, the contingency allows you to walk out unscathed.
Title Contingency
The most important document when buying or selling your home is the title. It shows that you are the rightful owner of the property. Typically, you should have the title reviewed by your attorney or title agency before closing the deal. By doing this, any issues with the title will be identified and resolved so it can be transferred to you clear and free. But, some problems can be hard to solve before closing. In such a case, the title contingency gives you the liberty to abandon the deal.
Home-Sale Contingency
Many home buyers love the home-sale contingency. The reason is simple – it allows them to sell their existing home so that they are able to buy the new one. In this clause, you are given a specified amount of time to sell your current property. In case you an unable to find a buyer, the home-sale contingency allows you to cancel the transaction and get back your earnest money deposit in totality.
Insurance Contingency
This is one of the most critical real estate contingencies for both buyers and sellers. As the buyer, you should apply for insurance as soon as you put down your deposit. Insurance protects your new home from flooding, fires, and other natural disasters. But, home insurance is not always a guarantee. For instance, a poorly maintained property is difficult to insure. Or, the premiums might be outrageously expensive. If you are unable to secure home insurance before the deal is closed, it’s better to back out. The insurance contingency clause gives you the right to do so.
Contingencies are quite crucial when buying or selling your home. To further understand these contingencies, contact The Willard Group, the best real estate agent in Midwest City.
