When you’re buying a home, your Scottsdale Realtor® will put together a purchase contract that outlines your rights and obligations.
In that contract, you’ll have contingencies – conditions that allow you to back out of the transaction if things aren’t going your way. There are very specific contingencies your agent will build into your contract to protect your rights and allow you to keep your earnest money deposit if you cancel the transaction. Some of the most common include financing, home inspection and appraisal contingencies.
What is a Financing Contingency?
A financing contingency is a clause in your contract that says if you can’t get financing to buy the home, you’re off the hook. Typically, you have a set period of time to get the funding for the house – and if your lender experiences a speedbump or two, you can ask the seller to hang tight. Many sellers will.
However, if your seller doesn’t want to wait – or if you are unable to obtain a mortgage to buy the home – a financing contingency can save you from losing your earnest money deposit and allow you to cancel the transaction without any other penalties.
What is a Home Inspection Contingency?
If you’re buying a home, you’ll more than likely have a home inspector visit the house and check out its major systems and structure. (We recommend that all buyers hire a qualified home inspector, even if the home is new construction, because the inspector can let you know whether there are issues with any of the home’s systems and structure.)
So what happens when something’s wrong with the house? All houses have issues (even new construction isn’t immune), so expect the inspection report to contain at least a handful of minor problems. You can ask the seller to fix them, ask the seller to lower the home’s purchase price, or back out of the transaction provided that your real estate agent has built a home inspection contingency into your contract.
What is an Appraisal Contingency?
An appraisal contingency is a clause in your contract that says if the home’s appraised value is lower than its sales price, you have the right to leave the deal behind while keeping your earnest money deposit.
Your lender will require an appraisal on the home. If the appraiser feels it’s not worth its asking price, the seller may ask for another appraisal. If that appraisal also comes in low, you could be entitled to cancel the deal.
Are You Buying a Home in Scottsdale?
If you’re thinking about buying a home in Scottsdale or the surrounding communities, we’d love to help you.
Call us at 480-360-0281 or get in touch with us online to find discover what DC Ranch has to offer you. While you’re here, check out our:
- Country Club Village homes for sale
- Desert Camp Village homes for sale
- Desert Parks Village homes for sale
- Silverleaf Village homes for sale