Just about every real estate contract between a buyer and a seller has multiple contingencies. What is a contingency? By definition a contingency is a future event or circumstance which is possible but cannot be predicted with certainty. By it’s very definition it is an unknown. So it is important to understand and manage contingencies. Let’s look at the most common real estate transaction contingencies.
Loan Contingency – If the buyer of the home is getting a loan the sale of the home is contingent on the buyer getting approved for a loan. The key to minimizing issues here is working with a reputable, local lender that has pre-qualified the buyer. Having a Realtor that has in-depth knowledge of the loan approval process is key. Open lines of communication with the lender is imperative.
Appraisal Contingency – If the buyer is getting a loan, their lender will require the property be appraised to ensure that the purchase price reflects an accurate value for the property. Working with a Realtor that has strong market analysis skills helps here, as well as knowing strategies for negotiating the appraisal based on market conditions.
Inspection Contingency – In most real estate transactions the buyers want to get the home inspected in order to know exactly what they are buying. Timelines for this process are key. Working with a Realtor that has many resources for home inspectors and contractors is important.
Sale of Another Home – Some buyers will have an existing home to sell before they can purchase. This contingency is one of the most complicated. Knowing all of the players (lenders, agents, title companies etc.) and everyone providing good communication is essential. There are defined timelines for when the buyer’s existing home must close and if there are delays there is a domino affect for other transactions.
The Shocket Team brings 17 years of experience to assist our clients with managing these contingencies. If you or someone you know is looking to buy or sell we can help.