Conditions included with an offer on a home that must be fulfilled before the deal can close. If a buyer or seller is unable to satisfy a contingency, then the offer on a home may become void. Contingencies usually include time frames in which a buyer can get his earnest money back if the contingency isn’t fulfilled before the deadline. For example, if a buyer schedules an inspection within the time specified on his contract and decides that he needs to make too many repairs, he can rescind his offer and get his earnest money back. Here are the most common contingencies. Learn the differences between contingent and pending.
Financing Contingency: the buyer must get approved for a mortgage loan to be able to buy the home. He will have a set amount of time to receive a loan commitment letter from a lender to confirm the approval of his loan application.
Inspection Contingency: gives the buyers the right to get the home inspected and negotiate further if there are repair issues. The inspection usually happens 5 – 7 business days after mutual acceptance. With REOs, the banks rarely agree to pay for any repairs; buyers should still get an inspection, but they’ll need to cover any repair costs.
Sale contingency: the success of the offer on a home depends on the sale of the buyer’s current home.
Title Contingency: the offer depends on whether the title of the home that documents the history of ownership is clear of any liens. This contingency grants the buyer the right to review a title report.
Appraisal Contingency: the success of the offer depends on an appraisal confirming a value for the home that is equal to or greater than the buyer’s offer amount.