Home contingencies are the areas in a real estate contract where negotiation is still possible after a contract is ratified. The FOCUS on NoVA Real Estate Team walks you through what the contingencies are and the process of getting through them.
What is a contingency?
In a nutshell, these are areas of a real estate contract that are still up for negotiation after an offer for a home is ratified.
The main contingencies a buyer works through are:
Home Inspection: The buyer hires a home inspector to come to the home and take a look at any potential issues with the home and to give an overview of the current state of the home. If a home contingency is in place, there are two options for how to move forward: 1) home inspection to negotiate with seller, where the buyer can ask the seller to fix items found in the home inspection report, and 2) home inspection to void-only, where the buyer receives the report back from the home inspector and then decides if they would like to move forward with the purchase of the home or not with the knowledge of the current condition of the home.
Well and Septic Inspections: Much like the home inspection, if well and/or septic are on the property, the buyer should have inspections done on the systems and should anything be determined to be wrong or in need of fixing, can be negotiated with the seller, but only if these contingencies are signed and presented with the initial offer.
Homeowners Association or Condo Association Documents: If the property you are purchasing has an homeowner’s association or a condo association, the buyer has the right to see the documents that govern the association along with the rules and regulations. The seller will have to get in touch with their association to order the documents. And once ordered, the association should deliver the documents within 14 days. Once provided to the buyer, the buyer has 72-hours to review the documents.
Financing and Appraisal: Usually the last contingency that is worked through during a home sale transaction is the appraisal and financing contingency. The buyer’s lender will hire a third-party appraiser to assess the value of the home. If the appraisal comes back at equal or greater value of the sales price, the transaction moves forward. If the appraisal comes back lower than sales price, the buyer can either accept the home at that price and then come to the table with the difference in price, or they can negotiate with the seller for a new price or to split the cost of the difference. The buyer can also walk away if the appraisal for the home comes in low.
If you have any questions about Northern Virginia real estate, reach out as we are happy to help.
