A home buying contingency is any circumstance or event that is possible, but not assured. When it comes to buying real estate in Downtown Boston, adding contingencies to an offer gives consumers the opportunity to back out of their offers should certain, negative developments occur. Understanding the different contingencies that exist and the impact that these can have on property sales will give you the best opportunity to protect yourself and your financial interests during these major transactions.
Sale of a Current Property
Boston condo buyers can make their offers contingent upon the sale of their current place. When funding from the sale of a current property is essential for financing the purchase of a new one, buyers have to account for the possibility that their current condo might not fare well on the market. This contingency provides a legal opportunity get out of a purchasing contract without suffering any financial loss. It is important to note, however, that this particular contingency is very unappealing to sellers given the amount of risk that it entails and the impact that it can have on the closing schedule. In competitive markets with limited inventories, this contingency can make it harder for buyers to get their offers accepted.
All-cash buyers don’t need financing contingencies given that they already have the resources for purchasing the condo for sale in Downtown Boston they want outright. Buyers who will be working with mortgage lenders, however, should always having financing contingencies in place, even if their loans have been pre-approved. Funding from mortgage lenders is never guaranteed until loan applications have been reviewed by underwriters and approved for final processing. Should lenders opt to withdraw their offers of funding based upon last-minute research, prospective buyers can back out of their offers without having to pay any stiff penalties.
Until properties have been thoroughly reviewed by licensed inspectors, buyers can never be sure that they’re getting fair prices or that they’re making wise investments. Inspections could reveal major problems that sellers were either unaware of or that they failed to disclose. Inspection contingencies are always recommended, even if buyers plan to make all-cash purchases or have special reasons for wanting to expedite the closing process.
A property title is a legal and official declaration of ownership. In certain instances, title research could reveal conflicts with ownership that make property sales extremely complicated. Title companies check the titles of properties to make sure that these are free and clear of all legal disputes before closing occurs. Should any unresolvable title issue exist, this contingency will prove necessary for giving buyers a legal way to back out of these deals.
Appraisals are official valuations of properties. These are used for taxation purposes and for establishing reasonable purchasing prices. Appraisal contingencies are often ordered by third-party lenders as a way of ensuring that homeowners are not overpaying for these investments and that home loans do not exceed the value of the properties that they’re financing. Appraisal contingencies can prove problematic in instances in which sellers are adamantly asking for more than property appraisers believe their place is actually worth.
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