Contingencies are the conditions that a seller must meet before a buyer will honor an offer to purchase the home. For a seller, these clauses are sometimes obstacles; for a buyer, they’re protection. If you’re buying a home in Pikes Peak, Woodland Park or any other area in Colorado, the following three contingency clauses should always be a part of your contract.
Contingency 1: You Must Sell Your Home Before Buying Another – This is especially true if you need money from your existing home to purchase your next one. If your home doesn’t sell, you can’t buy. The seller might not like this contingency, but it’s a better alternative than your taking on loans for both the old house and the new one as there’s no telling how long your old home will take to sell, or how much the final selling price will be.
Another approach is to set up a 21-day contingency for selling your current Colorado Springs home. In this scenario, the seller of the home you want can still keep the property on the market while you hopefully get some buy offers on your home. After 21 days you can either buy the new house or let the offer run out.
In this market, buyers are still somewhat in control. If the seller walks away because of your contingency, move on, or come back to the seller in a few months. Most likely the house will still be for sale.
Contingency 2: You Must Qualify for an Affordable Loan Rate – Even though interest rates are low, lenders don’t always qualify buyers for the lowest available rate. Figure out the highest rate and least-attractive loan terms that you can afford, and write those into your contingency clause. If the purchase price jumps too high, you’ll know you need to back out based on your stated cap.
Contingency 3: No Home Inspection Means No Deal – Your offer should absolutely stipulate that the house be inspected for all possible issues, including termites. If the inspector finds big issues, you can renegotiate the sale price or ask the seller to make the necessary repairs before you buy. Sellers will usually put a ceiling on how much they’ll pay for repairs, but you must then state your own cap as well. If a very expensive problem is uncovered, you’ll have a way out of the offer.
Some real estate agents privately refer to buyer contingency clauses as “weasel clauses,” insinuating that it allows buyers to “weasel out” of an offer penalty-free and with a refund of their earnest money deposit. In reality, contingency clauses are just common sense precautions for Colorado buyers as well as sellers. Planning ahead for contingencies helps everyone to know where they stand, and can often help a deal close with little or no angst.
Whether you’re buying or selling, a qualified real estate agent will help you make the best deal. When you’re ready to buy or sell a home in the Pike’s Peak Area, call The Roshek Group! We are ready to help you with all of your real estate needs.
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