VACAVILLE, CA, May 28, 2016—When you’re looking to purchase a home, it's important to anticipate potential problems that may arise before closing. This is where contingencies come into play.
“Contingencies in an offer protect against potential problems, so that if something does go wrong, you can cancel the contract without penalty,” explains Stephen Spencer, Bev Dorsett & Sue and Steve Kappel, Broker/Owners of Coldwell Banker - Kappel Gateway, who says contingencies should be included in any offer you present to buy a home.
Most offers include two standard contingencies, says Sue and Steve Kappel: a financing contingency, which makes the sale dependent on your ability to obtain a loan commitment from a lender; and an inspection contingency, which allows you to have a professional inspect the property.
Let's say it's the day before closing and your inspector finds fault in the home's foundation that would take thousands and thousands of dollars to repair. With the proper contingency in place, buyers can decide if they want to move forward with the purchase, or back out due to the new issues unveiled.
“Without contingencies, buyers could forfeit their deposit under certain circumstances if they back out of a deal,” says Sue and Steve Kappel.
The purchase contract should also include the seller's responsibilities, such as passing clear title, maintaining the property in its present condition until closing, and making any agreed-upon repairs.