Owning your own dream home is basically an American dream. A recent survey has indicated that 52% of Americans intend to buy a home in the next 5 years. If you're interested in finally owning a place that you can call your own, it's time to start looking for your dream home now. It can take awhile before you find a property that meets all of your needs and your demands. Once you've found the perfect home with your realtor, you'll need to sign several contracts before you can finally get your hands on the keys. To protect yourself and your best interests, make sure that your contract includes these 3 types of contingency clauses.
Appraisal Contingency Solidifies Value of the Property
The real estate market is rather fickle, and house prices can fluctuate significantly. When you put in an offer for a home, you're probably expecting the home to be worth a certain amount of money based on homes that are of a similar structure and design in nearby neighborhoods. However, the house you've bid on might not always meet expectations. In order to ensure that you don't get the short end of a bargain, make sure that your contact contains an appraisal contingency, which basically means that you won't have to purchase the home until an appraiser confirms that its value exceeds a certain amount.
Financing Contingency Ensures Ability to Pay
Not all home buyers are pre-approved for a mortgage. The last thing that you want to happen is to be responsible for purchasing a home despite not having the funds to do so. With that said, a financing contingency will give you time to not only apply for a mortgage, but also get your finances in order. This type of contingency clause will usually give you a set number of days to get a mortgage approved. If a mortgage or a financing plan is not secured by that time, the contact is automatically terminated. This also puts the onus on you to get your finances in order as soon as possible to avoid losing your dream home.
Inspection Contingency Guarantees the Condition of the Home
Although the house that you've bid on might look perfect from the outside, you never know what the condition of the internal structure may be. The plumbing may be leaking, and the insulation behind the walls might actually be falling apart, and you'd never know. An inspection contingency basically allows you to back out of a contract if an inspector finds the house to not meet certain expectations. This way, you won't be stuck with a house that requires major renovations before you can live in it.
When putting your bid for your dream home, make sure that your offer and contract contains contingency clauses that will protect you financially. Your realtor will be able to look over the contract for you ahead of time to make sure that there is nothing that you're missing.Share
1 March 2017
Although I've never worked professionally in the real estate business, I sure know my way around it. How, do you ask? Well, I have simply rented a lot of different places and worked with a lot of different landlords and real estate agents. In the past 7 years I've lived in 11 different houses or apartments, none of them my own. In finding those 11, I have looked at literally hundreds of apartments. I used to hate house hunting, but now it's kind of fun. You just need to know what you want and the right questions to ask. Hopefully this blog can help you learn some of the tricks of the trade from another renter like yourself.