Pay Attention to Contractual Contingencies

Buying a Des Moines home

Between the time that you sign a purchase agreement and you close on the house there are several opportunities for things to go wrong. For this reason it’s important that you have some protection built into the purchase agreement.   These protections or contingencies are in effect in order to release you from the purchase agreement and return your earnest money should something unforeseen occur. The main contingencies to be aware of are the:

  • Inspection contingency
  • Mortgage contingency
  • Appraisal contingency

 The inspection contingency allows provides the ability  to have the property professionally inspected within a given time frame (usually 7-10 days from the acceptance date). If serious defects in the property are discovered during the inspection, you would have the ability to request that the seller make any necessary repairs. If the seller is unwilling to make the repairs you should have the right to cancel the agreement with no penalty and your earnest money would be refunded.

 The mortgage contingency is in effect in order to protect you in case something unexpected goes wrong with your loan approval. If you have gotten a  proper pre-approval, the risk of something going wrong with the loan should be minimal but sometimes unforeseen situations such as a job loss occur. If the appropriate language is in place you woul be protected in case there was a problem obtaining the loan.

The appraisal contingency is also linked to the loan approval process. The appraisal will be required by your lender and the appraisers job is to determine if the home is worth the price price. If the appraised value comes in lower than the agreed upon purchase price, you should have the right to re-negotiate the purchase price. If the seller is unwilling to lower the price, you should have the right to cancel the agreement.