What if you write an offer on a home for sale, the seller accepts it and then you change your mind about the purchase? Are you locked into the contract?
Whether you’re suffering from buyer’s remorse, you found another home you like more or any other reason, it’s a common fear.
The short answer is, “it depends.” Finding another house you like more isn’t going to fly, nor will a bad case of buyer’s remorse.
There are other conditions, however, built right into the Purchase Agreement, that will allow you to get out of the contract. Often, this includes a return of your earnest money deposit, but not always.
These conditions even have a name: Contingencies.
The dictionary defines a contingency as “a provision for an unforeseen event or circumstance.” We like to think of it as an “if.”
“I will consummate the purchase of your home IF ‘Y’ occurs.”
Y is the contingency. It can stand for the success of your loan application, the sale of your current home, a satisfactory home inspection, the home appraises for what the bank is willing to lend. There are lots of different contingencies.
Contingencies typically have a time limit, which is written into the contract. For instance, the home inspection contingency may expire two or three days after receipt of the inspection report.
Let’s assume you didn’t miss the deadline. Instead, you ask the seller to fix the hole in the roof by a certain date. If the seller fails to complete the work to your satisfaction by that date, you can walk away from the Purchase Agreement with a full return of your earnest money deposit.
Today, we take a look at some of the more common contingencies in a home purchase contract.
That loan preapproval that you got from your lender? You do know that isn’t a guarantee to loan money, right? It is conditional on a number of factors, such as proof of employment and income as well as others.
Until the underwriter clears your file, you really don’t have a loan commitment, just a promise to try to get you one.
This is why buyers’ real estate agents insist on a loan contingency clause in the contract. This way, should you not get final loan approval for a mortgage, you can walk away from the Purchase Agreement without penalty.
If the appraiser (hired by the lender) finds that your home is worth less than what you’ve agreed to pay for it, they won’t approve your loan.
There are, of course, ways to mitigate this disaster:
- Come up with the additional money required
- Come up with a portion of the money required and request that the seller pay the other portion.
- Ask the seller to lower the price to the appraised amount.
- Walk away from the transaction
If it comes to it, and you end up walking away, the appraisal contingency in the Purchase Agreement allows you to do so.
The home inspection report doesn’t have to derail the deal. If there are defects to the property that the buyer can’t accept, negotiations can reopen to convince the seller to take care of them.
If the buyer and seller can’t come to a mutual agreement, the home inspection contingency to the Purchase Agreement allows him or her to cancel the deal, without penalty.
All contingencies are negotiable. If you feel you need more time to conclude a task, we will negotiate with the seller for more time.
It’s critical to meet the deadlines demanded of the contingencies and we work hard to keep you on track to do just that.
If you have any questions about anything in the home purchase agreement, don’t hesitate to ask. We’re happy to answer them.