The decision to buy a property is a big moment– you’re committing a large portion of your wealth and earning capacity to owning a new home.
Encouragement to sign on the dotted line will be coming from the owner and their agent, which often adds to the pressure of making one of the most significant decisions of your life.
As an experienced real estate agent, I always recommend that my clients take their time even if another buyer is expressing interest. The worst mistake you can make is to be swept up in the emotion of competing for a property and then regret your decision.
When you find the home of your dreams, there are some strategies you can use to ease some of the pressure.
Buyers can sign a contract but request the inclusion of “contingencies” – these are conditions which, if not met, will cancel the contract.
The owner doesn’t have to accept a contingent contract, of course, but it can ensure that you do not make commitments that ultimately you’re unable to meet.
If the owner accepts one or more conditions, the home will move from the status of “For Sale” to “Under Contract” or “In Contract”.
Below, are a list of common contingencies that can be included in a contract if the property’s owner accepts them. You might ask for one or more of these but only in good faith. For example, it’s not fair or ethical to make a contract contingent on your gaining finance if it’s already approved.
Needless contingencies risk your losing the property to a rival buyer. Finally, be aware that you can’t back out of a contract simply because you’ve changed your mind.
Finance – You may find your dream home faster than anticipated and then have to scramble to arrange your finance. This isn’t the ideal scenario – it’s best to be given mortgage pre-approval before starting your house-hunt – but it’s not the end of the world.
Appraisal – Your lender will want to value the property. On the rare occasion it refuses the loan based on the property’s asking price, this contingency will allow you to exit the deal or renegotiate.
Inspection – It’s a good idea to request this contingency, so you know what you’re buying. An inspection – whether it’s focused on the building structure or a possible pest infestation – may reveal significant problems. Your contingency can state the buyer must rectify any issue, or you can decide the contract is void. A third alternative is to renegotiate the price.
Your home – Many buyers don’t like the idea of buying a home before they’ve sold their own. So, you can request the contract be contingent on the sale of your own home. The owner will often request a deadline for this condition.