Understanding Contingencies
First time Arlington, Texas homebuyers may not be aware of a term and practice known as a contingency, which is actually quite common in the real estate world. An example of a contingency in the real estate market is when a buyer will put down an offer to purchase a home, sometimes before he even lists his own home for sale. This buyer actually needs to sell his own home so that he can come up with the down payment to buy the new home. So, he makes his offer 'conditional' upon the successful sale of his own home. This is a contingency.
Contingencies limit a buyer's or seller's responsibility to fulfill the contract and wrap up the deal. Some are major, like the example above and some are rather minor. Most Arlington sellers would be hesitant to accept the above proposal since there are many buyers in the market for a new home.
Some contingencies make sense. For example, a prospective home buyer can make his offer contingent upon his ability to get financing. If he cannot obtain the mortgage, then he cannot buy the home. This at least gets a tentative commitment from a buyer with genuine interest in buying the home.
Another prospective Arlington Texas home buyer may wish to make his offer contingent on the appraisal of the home being at or above the purchase price. Since it is the lender that hires the appraiser, this is an example of another contingency that is logical. That way both the lender and the buyer are protected from buying an over-priced home.
Real estate contracts have clauses in them that allows for re-negotiations in some aspects of the transcation. An example of this would be that a contract may state that a buyer must have his home inspected within a certain period of time. It will specify that the buyer has a few days to look over the inspection and report any problems found to the seller of the home. In this case, if there are no problems, the contingency is null and void.
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