In the world of real estate there are many terms that you will have to become familiar with if you want to buy or sell your property. And if you want to become a real estate consultant – with even more reason! We will be explaining everything you need to know about a real estate contingency next…
What is a Real Estate Contingency?
Oxford Languages defines the word contingency as a future event or circumstance which is possible but cannot be predicted with certainty. Which means that a contingency is an “in case that…”. For example: For the beach wedding in case it rains the contingency plan is to do the ceremony in the hall.
In the real estate world a contingency is the same. Only that it that serves as protection for the buyer of a property and applies when an offer is being redacted. These can be: (a) the things that must happen for the property to be acquired (b) the things that if they happen they give the buyer permission to reverse the purchase without losing their deposit. For example: to buy the house as a contingency you must (1) fix the leak in the laundry room (b) if it is not fixed before the end of the month and a roof inspection is not carried out, I will be able to retire treatment without any punishment.
Examples of Real Estate Contingencies
- Loan Approval – usually this is the first contingency that arises. Because if the buyer does not get the loan they will not be able to buy the house then.
- Home Inspection – this contingency offers the buyer the chance to discover if there are problems with the construction or important systems of the house. This would be done with the help of a professional and is usually an inspection by eye. It does not require looking inside the walls or anything like that.
- Sale of Buyer’s Property – normally this contingency is like a juggling act as the property must be sold quickly. Or else the seller will be wasting time where he could possibly get other offers.
- Valuation – this is a high value real estate contingency as it means that the property will be appraised to see if the price the buyer is paying is right or overpaying.
It is important that you understand that contingencies apply to the entire real estate market, not only for dwellings but also for properties or assets with productive purposes such as farms.
In our property market, as a buyer you must pay attention and care not only to obtain the funds or loans for the purchase, but also to verify the true and safe information of the property. For example: land use permits, affectation of areas by National Parks, reserves, etc. That inaccurate and printed information does not make you spend time, money and energy to achieve your objectives!
Alfonso Sancho – Nativu Farms
Normally if you are in a buyer’s market, and you make an offer with many contingencies: your offer may not be the most popular and the one to be chosen. Because in a buyer’s market there are many buyers for a property. Giving sellers a lot of power over what they want to accept to sell or not.
This is why it is very important to consult with a real estate agent, so you can know what contingencies to put to protect yourself but also get the property you want.
