What does contingent mean when buying a house in Calgary? Once a buyer's offer has been accepted, it can only be rescinded under certain conditions and in certain circumstances. These conditions are known as contingencies. The contingencies are put in place to protect the home buyer. Every home buying contract includes information about contingencies, usually at the beginning of the contract.
Some home buyers choose to waive the contingencies to make an offer more attractive to the seller. Others leave the contingencies in place in order to reap the full benefits of the contingencies. Home buyers should be familiar with the contingencies to ensure that the home buying process goes well.
The financing contingency is important for anyone who will be getting a mortgage to pay for their home. The financing contingency allows the home buyer to walk away from the purchase if they are not approved for the loan. Without a financing contingency in place, the home buyer could lose money if they back out of the home buying contract due to lack of a mortgage. For a home buyer who plans to pay for a home in cash, a mortgage contingency may not be necessary. Home buyers paying in cash often waive this contingency.
Sale of Home Contingency
It's common for a homeowner who wants to buy a new home to put a sale of home contingency in their contract. Wondering how to buy a house contingent on selling yours? The "sale of home" contingency allows a home buyer to walk away from the deal if he or she is unable to sell their current home. Sale of home contingencies are common, but many home sellers hesitate to agree to a sale of home contingency. Many home sellers worry that agreeing to a sale of home contingency could slow the sale process of their home.
In order for the loan to be approved, the home must appraise at or above the amount being paid. If the appraisal comes in below the offer price, the mortgage lender may reduce the amount being loaned to the buyer, and the buyer will have to make up the difference. If the buyer doesn't pay the difference, the seller must lower the price. If neither party will agree to do this, the appraisal contingency allows the home buyer to cancel the offer.
Most home buyers choose to get a home inspection. If the inspection turns up problems that the buyer wasn't anticipating, he or she can either require the seller to make repairs to the house. If the seller can't or won't make the necessary repairs, the home inspection contingency allows the Evanston home buyer to cancel the contract.
Can You Have Too Many Contingencies?
It is possible to try to purchase a home and have too many contingencies in place. In a market that is favorable to sellers, there's no reason for the seller to take a deal that might not go through because of one of the contingencies. For buyers trying to find a deal in a tight market, it's important to avoid too many contingencies. While it makes sense that the purchase is contingent on getting financing, it is going to benefit the buyer to have a pre-approval already in place before making an offer. When a buyer is trying to purchase a home yet has to sell their existing home in order to do so, this contingency is common. Talk with a real estate agent about possible contingencies when buying a new home and avoid ones that could cause the deal to fall through.
Work With a Reputable Real Estate Agent
Not all buyers know which contingencies to include and which to leave out of house sales, so it's important to work with a reputable real estate professional. It's up to the buyer to either include or waive the contingencies in the home buying contract. A good real estate professional can help a home buyer to understand the home buying contingencies, and include those contingencies in the contract.
If you're a home buyer who would like to start viewing properties, contact a real estate professional in your area today. He or she can walk you through the process of making an offer and can answer any questions that you might have about the home buying contingencies.
Justin Havre is the top producing REALTOR® with RE/MAX First, Canada's very first RE/MAX brokerage. Calgary real estate is his passion; Justin specializes in Southwest & Northwest Calgary homes for sale. He can be reached at 403.217.0003 or contacted through this site.