West Michigan has a relatively competitive real estate market currently. Houses are worth more than they were a few years ago and rarely stay on the market for long. Those hoping to buy a property often want their offers to be competitive, but they also have to think about protecting themselves.
One of the ways to reduce the risk involved with purchasing residential real property is to include contingencies in an offer submitted to a seller. These clauses allow people to cancel a closing without risking their earnest money. The following are some of the most commonly used contingencies for offers.
Appraisal contingencies
With the increase in sale price on the local market comes the risk of people making unrealistic offers for a property. An appraisal contingency allows a buyer to cancel a transaction if the appraisal comes in far lower than the price offered for the property.
Inspection contingencies
When looking at a beautiful vintage home in Heritage Hill or South Hill, people may let the architectural details drive their decision-making. They may have a hard time spotting latent defects that would cost a large amount of money to address. Inspection contingencies give buyers a way to cancel the closing without risking their earnest money when the property’s condition is far different from what they expected.
Financing contingencies
Appraisal issues and inspection problems can affect a lender’s opinion of the transaction as much as the buyer’s. Additionally, a sudden drop in someone’s income or credit score might mean that those who pre-qualified for a mortgage can’t actually fund a transaction. Financing contingencies protect buyers if they cannot secure a mortgage for a property despite hoping to purchase it.
Including the right contingencies when making an offer can help buyers limit the risk involved in buying residential real property.