Contingencies are clauses in a real estate contract that stipulate conditions that must be met by the buyer and the seller in order for a sale to happen. For example, many buyers write into the contract that being able to close on the sale of their own home is a condition of the offer to purchase the new home. This way, if the sale of their own residence falls through, they are not obligated to go through with the purchase of the new property.
For Buyers, contingencies are important because they can cover them should they be unable to fill the obligations of the contract, or should they decide they no longer want the property.
Some buyers especially in heated markets where several people are interested in buying the same home, may be tempted to do without any contingencies, in order to appeal to the seller.
This may not be a smart move because it’s basically working without a safety net. A contingency is a Buyer’s backup plan, if a Buyer is working with a good real estate professional, he will have several contingencies written into the contract to back him up.
When you sign a contract to purchase a home, several thousand dollars and possibly more are at stake.
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