When you’re ready to buy a home, you need to do a lot of preparation. There’s reviewing and getting your credit file in-order, saving up for a down payment, packing up and making a moving schedule, searching for the right property, and eventually making a purchase offer. That’s followed by a slew of other tasks, like scheduling a home inspection, pest inspection, choosing a title and closing agency, deciding on a moving company, and, getting prepared for the change.
Before you do tender a purchase offer, you’ll need to protect yourself. That’s where contingency clauses come-in and allow you ways to back out of the transaction without being susceptible to a financial mess and/or legal troubles. If you don’t think these are a big deal, take into consideration what could happen. When the seller accepts your purchase offer, you’re now legally bound to go through with the sale, if you try to back out, you’ll learn the power of specific performance, which can be used to force you into an unpleasant position.
Tips for Finding the Right Home
When you’re ready to house hunt, start with your needs, then, include your wants. For instance, you might prefer a lakefront home or one that’s on a large plot of land. The number of bedrooms, bathrooms, and square footage are also important, as well as your budget and desired location. When you’ve decided on a property type, and begin searching on the internet, pay attention to more than the home itself. Peak into the neighborhood, the school district, shopping, entertainment, and more.
“Keep in mind that a written and signed (ratified) purchase offer can bind both you and the seller. Whether it’s called a contract-to-purchase, an offer, binder, or earnest-money agreement, you can be held to your offer once it’s signed by the seller. If you leave anything out and the seller accepts and signs the contract, you’re out of luck. That’s why your purchase offer must include every minute detail and aspect of the sale.” —Kiplinger.com
Remember, when you purchase a home, you’re really buying into the neighborhood and location–those will be outside your control, so, keep this fact in-mind. Once you’ve identified several properties, see which have your wish list items, or, which could have these added. It’s also important to keep in mind that you’ll likely have to make a few concessions because there’s really no perfect property out there to be found. That being said, there’s also practically no limit to the changes you can make to a property to transform it into your dream home in the neighborhood of your choice, right where you most want to live.
Must-Have Home Buying Contingency Clauses
To get into the right home and do so without having to go through the ringer, you’ll need insurance. That’s what contingency clauses really are, insurance to protect you from entering into a contract with any recourse or options to be released. So, be sure to have these important contingency clauses to protect your interests:
- Home inspection. This contingency allows you the right to hire a professional home inspector to find and document major concerns. It also gives you the ability to back out of the sale if these are discovered and/or could occur.
- Pest inspection. Just like a home inspection, a pest inspection is important because infestations can be lurking and go undetected for months on-end. This will let you know if there is currently a pest problem or conditions are right to cause one.
- Financing availability. Simply put, if you need a mortgage to buy a home, this clause is necessary. Should you not qualify or be approved for less than the agreed selling price, this contingency gives you the ability to walk away.
- HOA rules. There are a number of rules that can fall under the purview of homeowners associations, and, you might not want to buy into a community that has certain regulations.
- Selling your current home. If you need to sell your home for this to be a viable transaction, you’ll need to put that into your purchase offer as well.
- Repairs. Should repairs be needed, you can also put contingency clauses on these to have them addressed before a certain date and the right to inspect the work.
- Fixtures, furniture, and appliances. These might stay in the home or go with the seller–it’s up to you whether or not to ask to keep certain items.
In addition to these, also include insurance. Once you make an offer, or, even before you give the seller’s agent an offer, look into insurance options and requirements. You certainly don’t want to find yourself in the position of buying a property that can’t be protected from one thing or another.