Why Home Buying Contingencies Can Make Or Break Your Purchase
There are a lot of myths about real estate clauses and how they work, and the discrepancies and anomalies can sometimes come back to haunt unsuspecting buyers. From financing nightmares to home buyers discovering that their property was built on a sinking swampland, the potential for catastrophe is very real. Home buyers may need to be a little savvier if they want to purchase their home with (near) total confidence.
Hiring an Inspector
Usually, buyers offer to buy the home so long as the property passes its inspection report. Proactive sellers may have their own inspection done but that shouldn't necessarily stop a buyer from hiring an unbiased party of their own. This is the chance for potential buyers to learn about the state of their wiring, the overall safety of the structure, and the general condition of their land.
Checking with the Bank
A pre-approval from a bank for a loan is in no way an actual approval for a loan, which is why most buyers will place a clause in their offer to cover themselves. If the bank does deny the buyer and the buyer doesn't have this clause, the seller could potentially sue the buyer for breach of contract. Lenders can back out of their promises for any number of reasons, so it's important to have an escape route if they do.
Researching the Title
Ownership of a property is not always a cut and dry issue. There are neighbors who may think that the hedge is theirs and ex-spouses who may believe they're entitled to 50% of the property. Buyers may very well purchase a property from a seller who doesn't actually have full ownership of the property! This real estate clause ensures that the title will be fully researched and confirmed before the deed is officially transferred.
Accounting for Scheduling
Buyers and sellers may very well agree on a set timeline for how long their escrow will last but their expectations can't always be fulfilled. Family emergencies may call an inspector across the country, lenders may be backed up with applicants, and title companies may not be able to track down the information they need. That's why buyers can request that these delays not affect the purchase.
Asking for More
These are some of the most common real estate clauses, but buyers are technically allowed to ask for whatever they like. These requests may be simple (e.g., fixing a broken floorboard in the kitchen) or more complex (e.g., installing solar panels before the buyers move in). If buyers are selling their old home, they can request that the home sale be contingent upon the sale of their home. It's up to buyers to request things that won't make a seller want to run for the hills.
How to Present Real Estate Clauses
Real estate clauses are formally made in the official Offer to Purchase. This document states how much the buyer is willing to pay for the property and their general demands for how the sale will proceed. While it's unlikely, real estate clauses are not a foregone conclusion. At the height of a seller's market, a buyer could conceivably offer to pay cash for the property without making their offer contingent on anything.
A qualified Copperfield real estate professional can make it easier to understand which real estate clauses are reasonable and which are outlandish. The truth is that it's different for every home sale, but it's helpful to understand the basics before getting started.