Protect Yourself with Buyer Contingencies in Your Purchase Contract
Learn how buyer contingencies protect home buyers and review buyer contingencies found in real estate contracts.
Buyer contingencies in purchase contracts protect you as a buyer by allowing you to back out of a contract without losing money. These contingency clauses are not meant to enable buyers to change their mind and walk away from a deal in a way that will harm the seller. Instead, all buyer contingencies in real estate transactions come with certain due dates and requirements, which must be met in order for the buyer to walk away unscathed.
North Carolina real estate transactions, and home sales in other states, often have standard contract contingencies. Other buyer contingencies are added by the buyer’s agent depending on certain circumstances or the wishes of the buyer. Pay attention to timelines and deadlines as a buyer may void a contingency by missing due dates. For example, failing to perform a home inspection on time.
Professional Home Inspection
The inspection contingency clause is one of the most frequently used buyer contingencies. This contingency gives you, the buyer, the right to order a professional home inspection. Then, once you review the inspection report, it allows you to back out of the deal if you’re not comfortable with the findings of the inspection.
Home Appraisal Contingency
Once again, this is one of the most common buyer contingencies. Before you can receive a mortgage loan from a lender to buy a new home in North Carolina, the lender will order an appraisal in order to get a professional opinion of the home’s value. The home appraisal contingency will allow you to back out of the purchase contract if the appraisal comes in below the purchase price and the lender will not close the home loan.
Financing Contingency Clause
Even if a buyer receives a mortgage pre-approval, that does not guarantee that there won’t be a problem with financing down the road in the middle of escrow. The financing contingency protects a buyer if the loan is denied or if a buyer who is not pre-approved cannot find a mortgage after the offer is accepted by the seller. In either case, this buyer contingency clause gives the buyer a way out of the purchase contract.
Sale of Current Home
Don’t be surprised if a seller does not accept this contingency clause and removes it from a counteroffer. This buyer contingency clause is often included when the funds from the buyer’s sale are needed to complete the purchase of the seller’s home. With this contingency, the sale of the seller’s home to the buyer is dependent upon the successful sale of the buyer’s home.
Acceptance of HOA CC&Rs
If you are considering buying a North Carolina home in a community with a homeowners association, always review the CC&Rs (Covenants, Conditions and Restrictions) prior to closing. Use this contingency clause to require the seller or listing agent to provide you with the latest copy of CC&Rs, and to allow you to back out of the deal if you do not like what you see when reviewing the particular rules and regulations.
Some of the other contingencies buyers use to protect themselves include a clear title, satisfactory survey, homeowner’s insurance, termite inspection, seller disclosure, move furniture early, occupy before closing, and others. Keep in mind, a seller who receives multiple offers on their North Carolina home with comparable sales prices will often choose to accept the offer with the fewest contingencies.
Need more information or have questions about protecting yourself with buyer contingencies? Buyers who choose Red Door Company to help them buy a home in North Carolina can rest easy knowing they are working with a North Carolina real estate company with proven success helping buyers purchase their dream home on their terms. Contact us today to experience a successful home buying experience.