Most sellers think that once they have agreed on a price with the buyers and the purchase agreement is signed, that they have a “done deal”. It would be nice if it was that easy, but there are many more steps to get to closing.
Most homes are sold with contingencies that protect the buyer. Contingencies give the buyers an opportunity to cancel the purchase agreement and get a full refund of their earnest money or renegotiate the price or terms.
If a buyer doesn’t have cash for the purchase, there is a finance contingency. A preapproval letter is submitted to the sellers with the offer, but sometimes the buyer has an additional contingency to sell their home, or the offer may be subject to the successful closing of the buyer’s home prior to closing on your home. It is not unusual for there to be several properties that must close in sequence, on the same day before your home closes. The finance contingencies require a lot of follow up on the part of the agent.
There are several types of inspection contingencies in addition to a general buyer’s inspection. Sellers may be required to have a water test or septic system inspection. Condos and townhome have a contingency for a 10-day review period for association documents. Land or lakeshore may be contingent on a survey, soil test, or plan approval.
There is usually a contingency for the home to appraise for the purchase price or higher. If not, the buyers may not qualify and can cancel the purchase agreement or renegotiate the price or terms.
The purchase agreement is also contingent on clear title, which the title company verifies and works with the seller to correct any issues.
The last contingency is the buyer’s walk through right before closing to confirm any required repairs are complete and the property is in the same condition as when they wrote the purchase agreement. By this point, the contingencies have been removed, except for the successful closing of the buyer’s home, as the buyers may need the proceeds from their sale to purchase your home.
An experienced real estate agent will monitor and negotiate the contingencies for your real estate transaction to ensure a successful closing.
Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to firstname.lastname@example.org. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.