Contingencies - know the facts before making an offer!

ARLINGTON, Mass. - Nov. 3, 2015 - PRLog -- If you're thinking of making an offer on a new home, your real estate agent will work with you to craft an offer that will really grab the attention of the seller. It can be tempting to think of an offer purely in financial terms – "How much should I offer against the asking price?" But there are a few other terms that you'll need to think about in order to create a winning offer while protecting your own interests. These terms are often presented as contingencies in the real estate contract.

What is a contingency?

A contingency is a requirement or condition that must be met if a sale is to successfully close. Any contingencies that are not met might jeopardize the sale, which could land both the buyer and the seller back at square one in terms of a home sale. Contingencies are a form of protection for the buyer to make sure that his or her interests are represented at the close of sale.

What are some common contingencies?

Since most people aren't in the financial position to carry two mortgages, a common contingency is that the buyer must sell his or her current home before closing on a new home. Similarly, many buyers include a contingency that they must secure financing prior to closing on a home. While many homebuyers opt to obtain pre-approval for a mortgage loan, financing is never 100% assured until the money is in hand.

The execution of a satisfactory home inspection is another contingency that is meant to protect a buyer against some previously unseen (and potentially expensive) problem with the property. In addition to a standard home inspection, the buyer might also require the sale to be contingent on inspections for a swimming pool, well water, pests, or other concerns specific to the property.

How are contingencies specified?

All of the precise details of any contingency must be spelled out in the real estate contract. Your agent can help you with this important step.

What does it mean if a home is listed for sale but has a "contingency offer?"

A home with a contingency offer on it is likely to close and be removed from the market, which is why many buyers are reluctant to look at a home with a contract on it even if the sale isn't final. If any of the contingencies in the contract are not met, however, the home could return to the market if the owner still wants to sell. In short, the sale is not yet final.

If you have additional questions about how contingencies work – and which contingencies best protect your interests as a buyer – speak to your real estate agent for more information. He or she has the experience and expertise to help you design an offer that protects your interests while appealing to the seller.

Interested to know more? Visit www.marklesses.com for more information.