When you buy a house, you sign an Agreement of Sale early in the process. This means you’re legally required to buy the house or suffer penalties, and you usually sign before you’ve taken other important steps, like inspections and appraisals. For this reason, there are provisions in the contract, called contingencies, that set conditions for the sale. This helps lower your risk of any expensive surprises later on.

What Conditions You Should Include

1. Inspection Contingencies

These kinds of clauses mean the house has to be inspected by a professional. It either needs to pass the inspection, or any problems that turn up during the process need to be accounted for when negotiating the final sale price.

For example, the home needs to be inspected for hazardous building materials, like asbestos or lead paint. If any are found, then the house needs to be remodeled and treated at the seller’s expense, or the price should be lowered to make up for the money you’ll spend fixing the issue.

2. Financing Contingencies

Most people need to get financing from a bank or another lender, rather than buying a house outright. If you don’t have your financing arranged already, a financing contingency allows you to make that a condition of the sale.

This way, if your bank turns you down for a mortgage, you aren’t locked into a contract to buy a house you can’t afford. You’ll also want an appraisal contingency, which allows you to renegotiate or back out if the house turns out to be worth less than the sale price; and a home sale contingency, which releases you from the sale agreement if your current house doesn’t sell and free up your funds.

3. Title Contingencies

Sometimes, the ownership of a piece of real estate isn’t clear, or a lien has been placed on the title because of the owner’s debts. Normally, your attorney or title company will identify these problems and make sure they’re resolved before the sale.

For example, they might need to settle ownership questions in court, or the seller needs to pay off the debt and have the lien removed from the title. If this process isn’t completed correctly so you can get the title free and clear, then a title contingency releases you from the sale.

To help you navigate these contingencies and more when you buy a house, choose Open Real Estate. Based in Lakewood, CO, they have served the Metro-Denver area and beyond since 2012 and have excellent relationships with many local contractors and inspectors to help you through the process. They pride themselves on honesty and keeping you informed. Call (303) 232-1111 or visit their website to get started.