Most purchase and sale agreements contain at least one of these forms but what are they and how do help the buyer, the seller or both?
When a buyer submits a purchase and sale contract or offers to the seller for review it probably will contain a contingency form of some kind. Here are the most common and how they apply.
INSPECTION CONTINGENCY - Most home buyers won't complete a sale without an inspection on the property. This is usually done by a professional and then approved and signed off on from the buyer and seller. If during the inspection something is found not to be approved by the buyer, the buyer can terminate the deal. If the seller can have an opportunity to remedy the problem then the buyer can continue with the sale. The contingency means that if the inspection is not approved by both buyer and seller, the transaction can not go forward.
FINANCING CONTINGENCY - A good, solid offer should be submitted with a pre-approval letter showing the seller the buyer is serious and have already done their financing homework. But this is still a good contingency to include just in case something should go wrong. A pre-approval letter just states that at the time of the application, everything was approved but from this time until the closing of the home something may come up and restrict the buyer from obtaining financing. If this is the case, the deal must terminate. These contingencies only apply if there is a mortgage loan to be obtained. If it's a cash deal, there is usually other forms or not as many.
NEIGHBORHOOD CONTINGENCY - This is a rare form but can be useful in the right situation. If a buyer wants to get in on a property and then check out the area later, this may be a good form to use. It may be used if the buyer lives out of the area and can't check out the neighborhood prior to making an offer or it's a hot property and the buyer wants to have the first crack at the property but then take some time to investigate later before fully agreeing to purchase the property. Buyers may want to research neighbors, crime rate, school issues or community information before continuing on the purchase of the home.
ADDITIONAL HOME SALE CONTINGENCY - This form states that the buyer, although interested in the home, must sell their current home before they can buy the new home. In a seller's market, these contingency type offers are usually not accepted because there are more reasonable buyers waiting in the wings to offer non-contingent offers. But in a buyer's market where there are just not that much competition for a home, the sellers may be more likely to agree to a contingent sale. Most of these forms allow the seller to keep the home on the market and still accept other offers if they come in. They are then allowed to return to the first buyer and offer the choice of removing the contingency or losing the property. A contingent offer may sit on the table for however long the buyer and seller agree to if the buyer's home still will not sell.
There are more contingency type forms and some are specific to the Clarksville TN real estate area so ask your agent if there is one that might work for your situation. We love to help buyers and sellers come together so let us know how we can help make your home buying dreams a reality.