Back HomeCrucial contingencies to consider when buying a home
Smart buyers know that home-buying contingencies provide an extra layer of protection in the process.
Buying a home is one of life’s most exciting and rewarding experiences. However, small surprises can quickly become major setbacks without the right protection. That’s where home-buying contingencies come in. These crucial conditions can protect your investments, finances, and peace of mind. Whether you’re a first-time buyer or an experienced homeowner, knowing the right contingencies to include in your offer is essential to making a confident and informed purchase.
WHAT ARE HOME-BUYING CONTINGENCIES?
These are the conditions you place on your purchase offer that must be met before the sale can proceed. They serve as your safety nets, enabling you to walk away or renegotiate without losing your earnest money if anything unexpected arises. Consider contingencies as your insurance policy during the buying process.
Here are the most significant contingencies to consider.
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Home inspection contingency
This contingency grants you the right to hire a professional inspector to evaluate the property’s condition before closing the deal. If the inspector discovers significant issues, such as foundation problems, a faulty roof, or outdated electrical systems, you can negotiate repairs, request a price reduction, or walk away altogether. Don’t skip this step, even if the home appears flawless at first glance. Besides, a home inspection contingency is usually non-negotiable.
Pro tip: Always attend a home inspection if possible. Walking through the property with the inspector gives you a better understanding of the home’s condition and a chance to ask important questions in real time.
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Financing (or mortgage) contingency
Even if you’re pre-approved, your mortgage isn’t guaranteed until the final underwriting process is complete. A financing contingency protects you if your loan falls through. There may be an unexpected credit issue, or the appraisal could come in lower than expected. Without this contingency, you might lose your earnest money deposit or find yourself buying a house without financing. Ensure your contract includes an escape route in case of a financing hiccup.
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Appraisal contingency
This contingency allows you to back out of the sale if the property appraises for less than the purchase price — unless you’re willing to cover the difference or the seller agrees to reduce the price. Remember that lenders base your loan amount on the appraised value, not on the sale price. Not having an appraisal contingency may leave you scrambling for extra funds.
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Title contingency
When purchasing a home, confirm that there are no hidden disputes, liens, or claims against the property. Title contingency gives you time to review the title report. It allows you to negotiate solutions to problems, such as unpaid taxes or disputes over property boundaries, or you can walk away if the situation becomes illogical.
Most reputable real estate companies, such as Berkshire Hathaway HomeServices Caliber Realty, will always recommend working with a trusted title company to perform a thorough title search.
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Sale of current home contingency
If you’re selling a home while buying another, this contingency can save you from major financial headaches. It makes your purchase dependent on the successful sale of your existing property. If your home doesn’t sell within a specified timeframe, you can back out without penalty. While some sellers may view this contingency less favorably in a hot market, it’s a valuable tool if you’re concerned about managing two mortgages at once.
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Homeowners’ association (HOA) contingency
Buying in a neighborhood with a homeowners’ association? Be sure to include an HOA contingency. This gives you time to review the HOA’s rules, fees, and financial health before committing. You don’t want surprises like unexpected special assessments or restrictive rules that don’t align with your lifestyle.
WHY HOME-BUYING CONTINGENCIES MATTER
Smart buyers understand that including the right home-buying contingencies is crucial for protecting their future home and finances. Real estate transactions are complex, and even your dream home can have hidden surprises. Choosing your contingencies carefully ensures that you are buying with an open mind.
In places like College Station and the Brazos Valley, market conditions can shift quickly, so having a local expert who understands how to structure your offer smartly is a major advantage.
A local real estate expert can help you tailor the right combination of contingencies for your specific situation. Every market (and property) is different, so working with someone knowledgeable about the nuances makes all the difference.
GET EXPERT ADVICE FROM BHHS CALIBER REALTY
Berkshire Hathaway HomeServices Caliber Realty delivers expert guidance and personalized support to first-time and experienced buyers throughout College Station and the Brazos Valley. Call 979.694.8844 or send an email here to start your journey toward your dream home!
