Wednesday, April 13, 2016 / by Ken Couture
If you are on the search for a new home, there is a lot to consider and keep in mind. One thing to remember is the importance of providing an offer to buy with key contingencies that can protect you and your money. There are all kinds of contingencies which can be included in an offer, from including the appliances, to replacing the roof, or repairing a walkway. The list can go on. Sellers have the right to refuse contingencies and provide a counter offer as part of the negotiation process. But there are some contingencies that home buyers should include in an offer no matter what.
Unless you are buying a home with cash and are not working with a lender to get a mortgage, you should always include a financing contingency in a home offer. Several things can happen between the time you get a pre-approval letter and when you apply for the actual loan you want. Interest rates may change, something may happen to change your credit, for good or bad, or your lender may no longer offer a loan program you were interested in, for example. With the unknown facing you, as a home buyer, a contingency that is based on obtaining financing to purchase the property is a key way to protect yourself when you make an offer.
Another key contingency to include is an appraisal contingency. As a buyer, you will have an idea of what homes are selling for. An appraisal will give you and the seller a better estimation of the value of a home. Many lenders require an appraisal be completed as part of the home loan process. The appraised value can also be used as a negotiation point in an offer. Should negotiation break down over this figure, and it is above or below the value range provided in an appraisal contingency, you can walk away from the offer.
A third key contingency to use with an offer to buy is a home inspection contingency. Home inspections are perhaps a buyer’s best insurance to ensure you know what you are purchasing. With an inspection contingency, you have another negotiation tool you can use. Should the report find major repairs that need to be done, you can give a counter offer to the seller to lower the price of the home, or to have certain repairs done before the home can be sold. If a home fails the inspection, you can also walk away from the offer when you have an inspection contingency. Without one, you could find yourself in a money pit and have no recourse to recoup losses on repairs.
With the help of an experienced Realtor ® you can make on offer on a home with the right contingencies to protect you and your earnest money. If you have any questions, call me. When you are ready to invest, buy, or sell, visit my website or call me direct, Ken Couture, 702-610-6247.