4 Most Common Types of Contingencies When Buying a Home
Wellington Florida Real Estate Q&A
Question: What are the Most Common Types of Contingencies when Buying a Wellington Home?
Answer: When buying a home in Wellington Florida it is not uncommon for homebuyers to include a contingency or contingencies in their offer, but before we discuss the most common types of contingencies let’s define what a contingency is.
So What Exactly is a Contingency?
A contingency is a type of clause added to a real estate contract that protects the buyer. It allows them a certain amount of time to “clear” their contingencies and if they are unable to do so within the given period of time they can usually cancel the contract without penalty, but it will ultimately depend on how the contract was written.
So What Are the Most Common Types of Home Buying Contingencies?
Below I’ve listed the most common types of contingencies I’ve come across working with buyers and sellers.
#4 Sale of Existing Home:
Sale of existing home contingency means the buyer must sell their current home before they can purchase a new home and if they are unable to do so within the contingency period they can cancel the contract. While this type of contingency use to be very common I personally haven’t had a seller accept this type of contingency in over a decade.
An appraisal contingency means the home must appraise for the contracted purchase price and if it doesn’t appraise within the contingency period the buyer can cancel the contract. However, in some cases, a home buyer may not need to add an appraisal contingency if they already have a mortgage contingency. Also, just because a home doesn’t appraise it doesn’t necessarily mean the contract needs to be canceled and buyers can find out what some of the other options are @ “What Happens if the Home I’m Purchasing Doesn’t Appraise?”
A financing contingency means the buyer must be able to obtain a mortgage within the contingency period, which is usually 30 days and if they are unable to do so can cancel the contract. While nearly 50% of Wellington home buyers need to obtain a mortgage in order to purchase a home not all of them will include this type of contingency. This is not something I recommend, but I have had several home buyers remove their finance contingency in order to compete with cash buyers and/or have their offer accepted.
#1 Home Inspection:
A home inspection contingency allows the buyer to perform an inspection within the contingency period, which is usually within 5-10 days of the effective date. However, unlike a lot of other contingencies a home inspection contingency doesn’t necessarily mean the buyer can cancel the contract, it will depend on the contract and addendums used. A home inspection is something I always recommend regardless if the home is brand new or looks well maintained.
So How Many Contingencies Do Most Buyers Have?
This answer varies, sometimes zero and sometimes 3-4, it all depends on the home buyer along with the current market conditions. In my experience, a majority of cash buyers will only have one contingency, the inspection while most financed buyers will have at least two, but once again they may choose to remove or add additional contingencies. My best advice for home buyers is to work with an experienced Realtor who understands the market conditions and how to write a winning offer.
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About the Author
Top Wellington Realtor, Michelle Gibson, wrote: “4 Most Common Types of Contingencies When Buying a Home”
Michelle has been specializing in residential real estate since 2001 throughout Wellington Florida and the surrounding area. Whether you’re looking to buy, sell, or rent she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.
Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more.