Deciding to buy a house is a huge financial and time commitment. Not only could the home you choose come with the largest price tag you will ever see, but it will probably take you decades to finally pay off and call your own. Even if you do decide to sell somewhere down the road, you will more than likely spend more money on this asset than any other you will ever own.
For this reason, you want to make sure that you get the best possible deal. You may also want the opportunity to walk away if it turns out not to be the best option for you. You could give yourself that peace of mind by including contingencies in your residential sales agreement.
What are contingencies?
Contingencies are a kind of "get out of jail free" card for homebuyers. These provisions in your agreement give you the option of renegotiating your deal with the seller or backing out of the sale altogether, depending on the circumstances. Below are some of the most common contingencies you may want to consider in your purchase:
- If you are like most other homeowners here in Ohio and elsewhere, you cannot pay cash for your new home. You will need a mortgage loan, and if your financing falls through, you don't want to still be bound to the deal.
- Your mortgage loan lender will require an appraisal of the home prior to approving your loan. If the appraisal comes back less than the purchase price, you will want to go back to the seller to reduce the price, but if he or she refuses, you could back out of the deal.
- Home inspections are often worth their cost since they let you know if there are any major issues with the home. If not, you gain peace of mind, but if there are problems, you can go back to the seller for repairs, a price adjustment or cancellation of the purchase.
- You may want to have a separate inspector just for the roof. Many home insurance companies request this since a leaky or otherwise damaged roof could lead to expensive damage and repairs.
- You will also want inspections for termites, radon, mold, asbestos and lead-based paint. Damage due to these issues can run into the tens of thousands of dollars -- money you most likely won't have since you just purchased a house.
- You may also want to have the sewer system properly inspected to make sure there are no issues. These repairs can also be quite expensive since they often require digging up your yard, the pipes and then putting it all back together.
- You may need a contingency, allowing you time to sell your current home. A seller will more than likely only agree to this if the contingency imposes a reasonable deadline on you.
- You may also want to include a contingency regarding a clear title inspection. The last thing you need is to deal with the possibility of someone else having a legal right to the home.
- A contingency regarding the veracity of the seller's disclosures would be wise as well. If any inspection or the title search reveal information about the home the seller should have known about, you may take issue with completing the deal.
- You or the seller may need a few extra days on the front or back end of the sale. You may include a contingency regarding these arrangements in your purchase contract.
As you can see, you could have any number of contingencies in your residential sales agreement. In most cases, you will need to attempt to renegotiate your agreement before simply walking away. However, under the right circumstances, you could cancel the purchase and receive your escrow money back. To know whether you need other caveats in your contract, you could consult with an Ohio attorney experienced in real estate transactions.