CONTINGENCIES
Contingencies are steps along the way that take place in most real estate transactions. A cash transaction may not include some of these steps depending on what the buyer desires and what the seller accepts regarding the signed contract. During the contingency period, a buyer may choose not to move forward with the home and will in most cases be able to have their earnest money returned to them.
The three main contingencies in most contracts include the inspection, appraisal and loan but there can be more. For example, a buyer may need to sell their own home first in order to purchase a new home.
Assuming the number of days agreed upon in the contract, buyers will have this time period to do any kind of inspections that they choose and review various disclosure reports about the property.
A general inspection of the home is usually performed first. A report detailing problems with the roof (for example) may result in a buyer hiring a roof contractor to find out more specific information and determine what the repairs should include.
When a buyer obtains a loan to purchase a home, an appraisal is ordered by the lender. The appraisal determines the value of the home. If the appraisal is equal to or higher than the sales price, the buyer should be pleased. If the appraisal is lower than the sales price, there are different options for both sellers and buyers. A great agent will take the time to explain your options, discussing the positives and negatives of each option.
Lastly, there is the loan approval. Once the loan is approved, a buyer will be ready to move forward with the purchase of the home.
