what are contingencies in real estate

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A contingency in real estate refers to aclause in a real estate purchase agreement that specifies an action or requirement that must be satisfied before the contract may become legally enforceable. Before a contract to be considered binding,both the buyer and the seller must agree on the terms of each contingency and sign the contract.

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In such cases, a house sale contingency is a real estate contingency clause that can help protect the buyer. If the buyers cannot sell their current home or at least the asking price within a specific amount of time, they can back out of the deal without being penalized. This may be one of the most common real estate contingencies. 7.

Financing Contingency: Also referred to as a mortgage contingency, the buyer can gain more time to obtain financing in order to purchase the property. Home Inspection Contingency: This contingency provides the buyer with an opportunity to have the property inspected and negotiate the purchase price or repairs based on any findings.

Not all contingent offers are marked as a contingency in the real estate listing. For example, purchases made with a mortgage generally have a financing contingency. Obviously, the buyer cannot purchase the property without a mortgage.

In essence, contingency contracts depend on certain conditions. Base Contingencies on Specific Events: In order for a contingency contract to be successful, contingencies must be specific and measurable. For example, a real estate contingency cannot simply say the property needs to be improved.