When you make an offer on a property, you have a legal obligation to complete the transaction. As such, you want to be very careful about what promises you make or what terms you agree to in such an offer, as it is a legally-binding contract.
Deciding to include certain limitations or contingencies on your offer can protect you from purchasing a property that isn’t what it seems or from circumstances that would leave you struggling financially.
Consider a contingency if you have to sell your house
Buying a new house, whether it’s bigger, smaller or in a better neighborhood can be a great move for you. However, you likely don’t want to move out of your existing home until you have a new place to live.
Putting a contingency on the purchase of the home that you must sell your own home within a certain number of days from the acceptance of the offer is a way to ensure that you don’t wind up responsible for two mortgages at the same time.
Protect yourself if you suspect there could be defects
The older a home is, the more likely you are to find a number of defects in the property. Defects could range from old wiring that requires replacement to a crumbling foundation that will require substantial investment to address.
You may already know that you will have to invest a certain amount of money in repairs and upgrades for the property to qualify for a mortgage. However, including a contingency that requires that the home receive an assessment or valuation that supports the mortgage amount or sales price can protect you from an expectation that you will close despite all those repair costs.