If you’re a first-time home buyer, it may seem rather surprising to offer someone such a substantial sum of money. When you put in your offer on a house, it’s probably more money than you have spent on one item in your life. Most buyers can’t even afford to do this on their own, so they put down a down payment and get a mortgage loan.
When making this type of financial investment, it certainly makes sense to protect yourself. One way to do so is by using contingency clauses. These give you a way out of the contract if the contingencies are not met.
Securing a loan
For instance, some buyers are not sure that they are actually going to be approved for their mortgage. Even if they have pre approval from a lender, they may be worried about getting final approval. They can use a contingency clause saying that they are allowed to retract their offer if they’re not approved for the loan, so they aren’t on the hook for making a purchase with money they do not have.
Passing an inspection
Another contingency clause centers around home inspections. The home buyers may have already walked through the property and they may not have any major concerns. But they can put in a contingency clause saying that they can walk away from the deal if an official inspection is carried out and the home fails. This way, they are not investing such a substantial sum in a property that isn’t up to their standards.
Real estate transactions can be complex, and contingency clauses are just part of the process. Take the time to carefully look into all of your legal options.