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Contingencies in a Purchase
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·1 min read

Generally, contracts can make anyone nervous, however, a real estate agent can explain all the clauses within it and the contingencies that protect it when buying a property. Below we explain the most important:Inspection Contingency.Also called a “due diligence contingency,” gives the buyer the right to have the home inspected within a specified period, such as 5-7 days. It protects the buyer, who can cancel the contract or negotiate repairs based on the findings of a professional home inspector.

Appraisal Contingency. Protects the buyer, used to ensure a property is valued at a minimum, specified amount. If the property does not appraise for at least the specified amount, the contract can be terminated and the earnest money, in many cases, is refunded to the buyer.

Financing Contingency.Also called a “mortgage contingency,” gives the buyer time to apply for and obtain financing for the purchase of the property. This provides important protection for the buyer, who can back out of the contract and reclaim his or her earnest money in the event he or she is unable to secure financing from a bank, mortgage broker or another type of private lending.

House Sale Contingency.Although in most cases it is easier to sell before buying another property, the timing and financing don’t always work out that way. A house sale contingency gives buyers a specified amount of time to sell and settle their existing homes to finance the new one.