Contingencies are terms or conditions that must be met in a timely order before the transaction can be completed. If a buyer or seller is unable to perform or complete these conditions or contingencies, then the contract is voidable. Here are some common contingencies:
Financing Contingency: If the buyer must obtain a mortgage in order to buy the home, the buyer will have a set amount of time to provide a loan commitment letter from the lender to confirm the loan application. If the this is not fulfilled in time, the contract is voidable.
Inspection Contingency: This allows the buyer several days to get an inspection on the property and see if there are any major repairs needed. This will also allow the buyer to renegotiate the terms of the contract if there are repairs needed. Bank owned properties or REO’s will generally not renegotiate repairs as the contract is “As-Is”.
Appraisal Contingency: This allows the buyer to renegotiate or void the contract if the property being purchased does not appraise at purchase price or higher.
Sale Contingency: The contract is dependent on the buyer selling their current home in order to purchase the new home.