After you've looked at single-family home listings and picked out the perfect one, you'll make an offer. The purchase offer you create when buying a home is a contract that states exactly what you are willing to give the homeowner for the house they own. This contract also includes statements about what you expect and want out of the deal, and these are usually listed in the form of contingencies. Contingencies serve several important roles in real estate deals, and one of the roles is to give buyers protection. Here are several ways you can use contingencies on a purchase offer to protect yourself.
Understand what they are
A contingency is a common thing added to a purchase offer for a house, and it basically refers to a condition you are asking for in the deal. There can be conditions that are related to financial aspects of the deal, and there can be conditions related to what must take place in order for the deal to go through. If a seller receives an offer that has contingencies, the seller is agreeing to them if he or she accepts the offer. This means the seller is bound to every condition listed on the agreement.
Types you can add for protection
There are many types of contingencies you can add, but there are a few specific ones you should add as a form of protection. The main one is a condition that states you can get a home inspection on the property and that the deal is only valid if this inspection comes back in a satisfactory manner. Another type you should add for protection is a mortgage contingency, which basically states that the deal is only valid if you can get a loan to buy the property. If your lender denies the loan, in this situation, you can walk away from the deal.
Getting out of the contract through contingencies
If the seller is not willing to meet the contingencies he or she agreed to, or if something occurs that breaks a contingency, you have the option of backing out of buying the house without losing the deposit you offered. If you do not want to back out, you have the option of renegotiating on the deal with the seller to reach a new agreement for the purchase of this home.
If you add the right contingencies, you will have protection in the deal. You can find out more about which types you should add by contacting a real estate agent.