Offering to Purchase Real Estate- the Basics

Contingencies in a Purchase Offer

In most purchase transactions there may be a slight challenge or two, but most things will go quite smoothly. However, you want to anticipate potential problems so that if something does go wrong, you can cancel the contract without penalty. These are called "contingencies" and you must be sure to include them when you offer to buy a home.

For example, some "move-up" buyers often agree to purchase a home before selling their previous home. Even if the home is already sold, it is probably a "pending sale" and has not closed. Therefore, you should make closing your own sale a condition of your offer. If you do not include this as a contingency, you may find yourself making two mortgage payments instead of one.

There are other common contingencies you should include in your offer. Since you probably need a mortgage to buy the home, a condition of your offer should be that you successfully obtain suitable financing. Another condition should be that the property appraises for at least what you agreed to pay for it. During the escrow period you are likely to require certain inspections, and another contingency should be that it pass those inspections.

Basically, contingencies protect you in case you cannot perform or choose not to perform on a promise to buy a home. If you cancel a contract without having built-in conditions and contingencies, you could find yourself forfeiting your earnest money deposit or worse.

Next Earnest Money Deposit

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Home Buyer Advice - Menu

Benefits of Owning Your Own Home
The Best Investment Income Tax Savings Stable Monthly Housing Costs Forced Savings Freedom and Individuality More Space
Important Things To Avoid Before Buying a Home
Don't Move Money Around The Effect of Changing Jobs No Major Purchases of Any Kind
Don't Buy a Car - or Did You Already Buy One?
When Income Grows and You Want to Buy "Stuff" Debt-to-Income Ratios and Car Payments How Buying a Car Reduces Your Purchase Price
The Business Cycle and Buying a Home
Recession and Expansion Supply and Demand Should You Try to "Time the Market"?
Comparable Sales and Your Offer Price
Determining Your Offer Price Comparable Sales in the Public Record Comparable Sales in the Multiple Listing Service Comparable Sales - Pending Transactions Other Factors Influencing Your Offer Price
Major Factors Influencing your Offer Price
How Property Condition Affects Your Offer How Home Improvements Affect Your Offer How Market Conditions Affect Your Offer How Seller Motivation Affects Your Offer The Final Decision on Your Offer Price
Offering to Purchase Real Estate- the Basics
Introduction and Overview Contingencies in a Purchase Offer Earnest Money Deposit The Closing Date Transfer of Possession
Writing an Offer - Safeguards Regarding the Property
Disclosures From the Seller Condition of the Property Upon Transfer Inspections You Should Require Final Walk-Through Inspection
How Financing Details Affect Your Offer
Down Payment Interest Rates Closing Costs and Financing Incentives Seller Financing Cash Offers Other Financing Details in Your Offer
How FHA and VA Financing Affects Your Offer
Extra Costs for the Seller VA and FHA Appraisals
Selecting Service Providers
You and the Seller Must Agree Escrow and Settlement Title Insurance Termite and Pest Inspection

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