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Consider contingencies carefully when buying a home

On Behalf of | Oct 31, 2018 | Firm News, Real Estate Transactions

If you are ready to buy a new home, you can be managing several details from securing financing to preparing your current home to go on the market. And all these moving parts don’t disappear just because you find the right home.

As such, you might consider including contingencies in any offer you make. Before you do this, though, you will want to think carefully about how they might affect your offer.

Backing up, we should explain that contingencies are conditions that must be fulfilled in order for you to buy a home.

As one recent article notes, sellers can be wary of contingencies in offers. In some cases, the problems created by contingencies outweigh the benefits of selling a home. Therefore, you should keep the following tips in mind when it comes to real estate contingencies on an offer.

  1. Minimize them, if possible. To make your offer more attractive and easier to accept, you can get pre-approved for a loan or consider waiving an inspection if the homeowner has already completed one. If you must include a contingency, try not to make it too restrictive or difficult to enforce, otherwise, it can seem too problematic for sellers.
  2. Prepare for the possibility of a kick-out clause. Sellers may accept your offer with contingencies, but they likely will not wait indefinitely and may therefore insist on a kick-out clause. This clause gives them permission to continue showing the house. If a better offer comes in they want to accept, you could either remove any contingencies and move forward with the purchase or you risk losing the home.
  3. Consider other ways to make your offer attractive. If you do need to include contingencies, you can make your offer attractive in other ways. For instance, you might offer more earnest money or a higher purchase price. Some prospective buyers include a personal letter with their offer as an emotional plea to the sellers, which could be persuasive.

When it comes to buying or selling a home, there can be a lot more to an offer than people realize. With so much complexity in this step, it can be critical for buyers and sellers to have legal counsel when making, reviewing or accepting an offer.