Common Contingencies in Real Estate

Without a doubt, when you are selling a home you're bound to see various types of real estate contingencies. Quite simply a real estate contingency is an action that must take place before the conclusion of the contract can be ratified.

In home sales there are some very common contingencies that you almost always see in real estate contracts. They are a home inspection contingency and a financing contingency. Most buyers are going to desire to have an understanding of exactly what they are buying. Knowing the home you are purchasing is structurally sound and does not have any safety defects is vital to most buyers.

Most buyers also are not able to pay cash for a home, so they must put a mortgage contingency clause in the agreement that allows them to procure financing. Most of the time buyers have no issue with getting financing as they will be required to get preapproved. There are rare circumstances, however, where that may not be the case, such as when a buyer loses their employment.

In that case the mortgage contingency clause would protect the buyer and they would be able to get their earnest money deposit back. While the home inspection and mortgage contingency clauses are the most common that doesn't mean there aren't others - there certainly are.

For example, a buyer may insert a real estate contingency that says the purchase is subject to them selling their current home. This is known in real estate as a home sale contingency. The more contingencies found in real estate contracts the more undesirable it becomes for one party or the other.

This is why when a buyer is paying cash for a home or waives a home inspection, their offer becomes far more attractive. The bottom line is both buyers and sellers should be intimately familiar with contingencies. They should be read over carefully. You should never sign a contract without having a full understanding of the real estate contingency clauses.

If you are unsure it would be wise to consult an attorney. In the article reference found at Maximum Real Estate Exposure, you will see one of the most in-depth articles discussing the various contingencies found in real estate. You would be wise to read and understand it if you're going to be buying or selling a home.

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