If you’re a first-time homebuyer, buying a home is an exciting time in your life — not to mention a little anxiety-inducing. But after touring dozens of homes and finally finding “the house,” you’re ready to make an offer. Before you do, take time to consider all the potential risks and home-buying contingencies that will help protect you as a buyer. Such as being able to back out of your offer if a significant repair issue is discovered, like a crack in the foundation or leaking roof. Though you can technically add any contingency you want to an offer, here are the 9 most common homebuying contingencies to consider.
1) Home inspection contingency
As the buyer, you should always order a home inspection. A trained and certified home inspector will look for issues with the structure and home systems (like plumbing, electrical, and HVAC) that may not be obvious to the buyer. When you purchase a house that ends up in need of a major repair, you could take a significant financial hit. The inspection contingency can protect you from purchasing a poor property investment because it allows you to back out of the deal if a major issue is discovered.
Pro tip: TnL Home Inspections shares, “A professional home inspection is an important step in buying or selling a home because it allows the client to negotiate the sale price, repairs, or move on to another property.”
2) Appraisal contingency
An appraisal contingency protects lenders more so than the homebuyer and is almost always required by your lending institution if you’re taking out a home loan. It confirms to your lender that the home is worth the price you’re paying for it, and if you default on your loan they will be able to recoup their expenses by selling the house.
A favorable home appraisal, however, may offer you peace of mind, knowing that you are buying a home with instant equity because the value is more significant than your purchase offer. With an appraisal contingency in place,…