Compare Listings

Understanding Common Contingencies in a Real Estate Contract

Understanding Common Contingencies in a Real Estate Contract

All of the paperwork that comes with buying or selling a home can be overwhelming. The process is so involved and you need to understand everything that you’re signing. One of the many elements of a real estate contract that’s important to pay attention to are contingencies, as they can have a significant impact on how the sale will proceed.

What is a Contingency?

A contingency is a condition or action that must be met for a real estate contract to become binding. Contingencies are agreed upon by the buyer and the seller and are included in the contract. Although agreed upon by both parties, most contingencies in a real estate contract benefit the buyer. They will allow the buyer to back out of the contract and recover their earnest money if the contingencies are not satisfied. 

Earnest money is a deposit made to the seller to express that they are serious about purchasing the house. This deposit holds the home while the buyer obtains financing and has a title search, property appraisal and various inspections completed. Earnest money typically accompanies a signed real estate contract or purchase agreement. It can also be submitted with the initial offer. These funds are held in an escrow account until closing. If all contingencies are met, the earnest money is applied to the buyer’s down payment and closing costs at settlement.

Common Contingencies

If the specific terms or conditions of any contingencies are not met, both parties have the option to back out. While there are potentially numerous contingencies, here are some of the most common ones included a real estate contract. 

Inspection – This type of contingency is meant for the buyer’s benefit. A home inspection will provide the buyer with a thorough assessment of the house they are considering. An inspection contingency can cover the home’s condition and it’s systems inside and out as well as any mold or termite damage. Once the home inspection is received the buyer can determine if any necessary repairs require that they renegotiate with the seller. If the seller is unreasonable or unwilling to renegotiate, the buyer can walk away from the sale.

Financing and Appraisal – While these are separate contingencies, they do go hand in hand. Financing contingencies are pretty much standard in a real estate contract. They provide the buyer with sufficient time to secure financing. If the buyer is unable to receive financing, they have the right to look for alternative sources or to back out of the sale.

A home appraisal is an unbiased determination of the fair market value of the home by a professionally-trained third party. It is usually one of the things required when applying for financing, as a mortgage will not be given for more than the fair market value. Appraisal contingencies ensure that the buyer is protected if the sale price doesn’t align with the value determined by the appraisal and the seller isn’t willing to renegotiate. 

Title – A home’s title is a legal document showing a record of its ownership, both past, and present. It also serves as a record of any liens and judgments against the property.  A title contingency allows for any issues that might arise to be cleared up before closing. If it is determined that the issues are unresolvable or the buyer is unwilling to take them on, they can terminate the real estate contract. 

Home Sale – This contingency comes into play if the buyer currently owns a home they are trying to sell. While it greatly benefits the buyer, it has become unpopular with sellers. In today’s market, it is only implemented under certain circumstances. It requires sellers to take their home off the market for a specific period of time with no guarantee the buyer will sell their home and follow through with the purchase. For this reason, sellers often pass on offer with a home sale contingency attached.

 long beach island realtors

Real Estate Contract Professionals

It’s important to team up with real estate professionals who can help you navigate the contingencies and all the other paperwork involved with buying or selling a house.

Choose an agent who has extensive experience with your location, the type of property you are selling and a proven sales record. If you’re selling real estate on LBI, consider working with the Freeman Group

Over the last 20 years, we have earned the well-deserved reputation as the premier real estate company on Long Beach Island. Our team has completed hundreds of successful transactions establishing as the most productive and result-driven realtors in Ocean County.  Whether you’re interested in buying, selling or investing in Jersey Shore real estate, contact us today.

 

img

freemangroup

Related posts

Home Inspections – You Don’t Have to be Present but Why You Should Be

Buying a new home is exciting, especially if you’re a first time home buyer. Once you’ve found...

Continue reading
by freemangroup

Understanding Earnest Money – What it is and How it Works

Whether you’re a first time home buyer or it’s been a while since you purchased your last home,...

Continue reading
by freemangroup

Thinking About Buying a Beach House on LBI? Fall is a great time!

Have you been thinking about buying a beach house and are finally ready to make your move? Many...

Continue reading
by freemangroup

24 thoughts on “Understanding Common Contingencies in a Real Estate Contract”

  • hint filmi izle

    January 19, 2021 at 10:28 am

    Very good sports watch that works great in all modes. Loree Hube Saraiya

    Reply
  • sex tube

    January 21, 2021 at 1:25 pm

    Pretty! This was a really wonderful article. Thanks for providing this info. Josy Erin Nahamas

    Reply
  • erotik izle

    January 21, 2021 at 2:07 pm

    I have read so many posts regarding the blogger lovers however this piece of writing is truly a good article, keep it up. Hermione Guy Colin

    Reply
  • yenilmezler

    January 29, 2021 at 8:51 pm

    Hey, thanks for the article. Thanks Again. Really Cool. Vivienne Holly Siblee

    Reply
  • watch

    January 30, 2021 at 9:53 am

    Hey, tend to be not you too great? Your own writing widens my knowledge. Give thanks you. Elsinore Warren Amr

    Reply
  • yabanci

    January 30, 2021 at 10:26 pm

    Appreciation to my father who shared with me concerning this blog, this webpage is genuinely remarkable.| Tiffy Hugh Jariah

    Reply
  • netflix

    January 31, 2021 at 2:37 am

    Accusamus et iusto odio dignissimos ducimus qui blanditiis praesentium voluptatum deleniti atque corrupti quos dolores et quas molestias excepturi sint occaecati cupiditate non provident. Marney Claudio Etheline

    Reply
  • online

    January 31, 2021 at 10:56 am

    Think I saw this at Salon London earlier this year. Liked the fragrance of the mens aftershave. Leann Marve Alfi

    Reply
  • movies

    January 31, 2021 at 10:41 pm

    Its like you read my mind! You seem to know so much about this, like you wrote the book in it or something. Dolores Booth Tabb

    Reply
  • turkce

    February 1, 2021 at 12:38 am

    I really like it when individuals get together and share opinions. Great blog, keep it up. Christa Michal Wheelwright

    Reply
  • 720p

    February 1, 2021 at 11:44 am

    Wow! This could be one particular of the most helpful blogs We have ever arrive across on this subject. Actually Great. I am also an expert in this topic so I can understand your hard work. Bertine Kristoforo Safire

    Reply
  • dublaj

    February 1, 2021 at 1:41 pm

    Really informative article post. Much thanks again. Awesome. Nyssa Gerome Dorn

    Reply
  • altyazili

    February 6, 2021 at 4:46 pm

    Wow, this article is fastidious, my younger sister is analyzing these things, thus I am going to inform her. Carline Abie Tufts

    Reply
  • filmkovasi

    February 6, 2021 at 5:06 pm

    Greetings! This is my first comment here so I just wanted to give a quick shout out and say I truly enjoy reading your blog posts. Can you recommend any other blogs/websites/forums that cover the same subjects? Thank you so much! Deborah Fidel Sabba

    Reply
  • yabanci

    February 6, 2021 at 7:01 pm

    I have read so many content regarding the blogger lovers but this paragraph is actually a pleasant piece of writing, keep it up.| Phyllida Wiley Winifield

    Reply
  • online

    February 6, 2021 at 11:17 pm

    Way cool! Some extremely valid points! I appreciate you penning this article plus the rest of the site is also really good. Lauree Hillyer Johathan

    Reply
  • altyazili

    February 7, 2021 at 12:47 am

    I always was interested in this subject and still am, thankyou for putting up. Marena Tristam Orson

    Reply
  • netflix

    February 7, 2021 at 12:47 am

    Buna ziua. As dori sa folosesc produsul dumneavoastra pentru a-mi indeparta vopseaua care acum este mult mai inchisa decat culoarea mea naturala. Intrebarea mea este, daca am fost decolorata inainte de a ma vopsi culoarea actuala, si anume cea inchisa, dupa folosirea produsului voi reveni la culoarea naturala sau la culoarea parului decoloarat? April Camey Rorry

    Reply
  • 720p

    February 7, 2021 at 1:27 am

    I love all of your messages and am enjoying this Revelation study so much. Time is coming to a close and the better we can prepare for it the better we will be. God bless you and your family Pastor David. Liana Jeno Douty

    Reply
  • turkce

    February 10, 2021 at 10:37 am

    Wow, superb blog format! How lengthy have you been running a blog for? you make running a blog look easy. The total glance of your web site is magnificent, as smartly as the content material! Adan Abelard Ressler

    Reply
  • turkce

    February 13, 2021 at 11:54 am

    Excellent post. I will be going through many of these issues as well.. Gwen Baudoin Angelico

    Reply
  • turkce

    February 16, 2021 at 3:58 pm

    Thank you for this lovely introduction to Sydney and Cape Breton. I hope to spend five days on the island, next summer/fall, whilst exploring Atlantic Canada. Mellisent Abbie Sebbie

    Reply
  • frolep rotrem

    April 5, 2021 at 12:48 am

    I enjoy the efforts you have put in this, thank you for all the great blog posts.

    http://www.froleprotrem.com/

    Reply
  • zortilonrel

    April 10, 2021 at 1:07 pm

    Thanks for helping out, good information. “The laws of probability, so true in general, so fallacious in particular.” by Edward Gibbon.

    http://www.zortilonrel.com/

    Reply

Join The Discussion

Call Now Button