The Northern Virginia real estate market has been crazy lately! Most homes are receiving multiple offers within days of going on the market. Most winning offers are well over list price. And in many cases, buyers are waiving popular contingencies. But, before you start throwing contingencies to the wind, it is important to understand: What they are. What waiving them means. And what other options may be available.
Contingencies are part of most Northern Virginia real estate contracts. They allow a buyer and seller to move forward through the home buying process, but also prevent them from being stuck in a contract when things do not go as planned. Also, some contingencies are required for certain types of financing.
HOME INSPECTION CONTINGENCY
The home inspection contingency allows the buyer a set amount of time to hire an inspector for a full inspection of the home. Based on the results, and the wording of the contract contingency, the buyer may have options to lower the sale price or receive cash towards repairs. On the other hand, it may be used for informational purposes only. So, a good Northern Virginia real estate agent will help you determine the best option.
APPRAISAL CONTINGENCY
The appraisal contingency ensures the lender the price of the home is reasonable. Therefore, it is required by most government backed loans like FHA and VA. Also, other lending situations may require it as well. It involves sending in a certified appraiser to evaluate the home. Then, he/she will use comparable properties and market information to determine the home value. Typically, lenders will not loan over the amount of the appraisal. This is because it becomes a larger risk factor for them.
An option available to you in a competitive situation may be to offer to pay any amount or up to “x” amount over the appraised value that the lender will provide. But, talk with your agent to find out what options are available and/or advisable for you. Also, they will know what to do when an appraisal comes in low.
SALE OF HOME CONTINGENCY
The “Sale of home” contingency allows termination if the buyer is unable to sell their current home. “Sale of home” contingencies can be big obstacles in a competitive seller’s market. Because they come at a big risk to the seller. Therefore, many offers that contain them are turned down. A great agent can help you go over possible options to avoid adding this contingency.
FINANCING CONTINGENCY
The financing contingency gives the buyer the ability to terminate the contract if they are unable to obtain financing for the home. This contingency is beneficial to protecting the buyer. What you include should be reviewed with your agent and/or lender. Not including it could: Put you at risk of losing earnest money. Force you to complete the transaction without financing. Or you could face other legal consequences.
CONCLUSION
An informed agent is vital to ensuring a buyer includes the right contingencies. Also, they understand the way to write them. As a seller, there is more to an offer than just the numbers. An agent can help you analyze each offer fully.
These are just some popular examples. Tons of different contingencies exist. Contracts are worded differently, and other considerations must be taken when entering a home purchase and sale agreement. It is very important to work with someone who can ensure your best interests.
As a Northern Virginia real estate agent, I am happy to help you navigate this process. Finding a buyer’s agent will ensure your interests come first. So, if you are interested in finding out more about contingencies, listing your home or buying a home, please CONTACT ME or feel free to call/text me at 703-969-4677.
**This article is for informational purposes only. It is not to be taken as legal advice. Do not act or refrain from acting based on content provided. Consult an attorney or professional for advice.
