No one wants to discover that the home they purchased, the home that they thought was practically prefect in every way, is actually filled with black mold, termites, and foundation that’s ready to break apart at a moment’s notice. This is why home buyers should utilize contract contingencies to protect themselves from committing to buying a home that is hiding some dark secrets. Here are six contingencies all home buyers, in Depaul or elsewhere, should consider using.
All home buyers are encouraged to have their new home inspected after their offer has been accepted. An experienced home inspector can spot all the flaws in a home that an uneducated buyer would look over. An inspection contingency is a special allowance that states that should the home inspection reveal some sort of problem, the buyer can choose to back out of the deal.
When buying a new home, most buyers want to make sure they’re able to sell their current one so they don’t have to juggle two mortgages at once. A home-sale contingency can be appealing because it will allow the buyer to back out of the deal should they be unable to sell their home in a set amount of time. Home-sale contingencies do come with a caveat that sellers may be tentative to accept an offer that comes with one because it adds uncertainty to the deal.
An appraisal contingency can work one of two ways: first, it will protect the buyer by saying if the appraisal they get of the home isn’t as valuable or more valuable than the price the seller is asking, they can back out of any agreement. The second way it can work is by allowing the buyer to ask the seller for a reduced price if the appraisal value doesn’t meet the asking price. Then if the seller refuses to reduce the price, the buyer can back out with no troubles.
A title contingency is one of the most common contingencies to have. It merely assures the buyer that the person selling the home and property is the same person who actually owns them. If the seller isn’t the true owner, the buyer may back out of the deal if they so please.
Unfortunately, even if a buyer is preapproved for a loan when their offer for a home gets accepted, mortgage lenders can still rescind that approval before closing if they feel they need to. If this happens, the buyer is now without the money to purchase a home, but a financing contingency acts as a safety net so they can get out of the deal if they find themselves without a mortgage.
6. Home Insurance
Sometimes, a home happens to be located in a high-risk area for natural disasters such as tornadoes in Oklahoma, hurricanes in Florida, or fires and earthquakes in California. A home insurance contingency will require the home is eligible for insurance for these sorts of risks. This sort of contingency can be quite useful because many buyers have moved into new homes in these sorts of high-risk areas only to discover that insurance companies refuse to cover homes.
These six different contingencies are important options for home buyers to consider using when purchasing a new home. Sometimes, life causes complications, and it can be a good idea to have a safety net in place, especially when buying a new home.
Ted Guarnero, REALTOR® is a full-time real estate agent with over 1000 homes sold and $400 million in sales. Working with Compass real estate offering professional and effective real estate services to help you succeed in the local real estate market. Visit www.seeChicagorealestate.com for information on downtown Chicago real estate and to get in touch with an expert in the Chicago real estate market. Before you hire your next Realtor call Ted Guarnero 855-See-Chicago, it's on the House !