Boston Condos For Sale: Home Buying Contingencies (Most Common In 2021) Boston Condos For Sale Ford Realty

Boston Condos for Sale

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A home buying contingency is any circumstance or event that is possible, but not assured. When it comes to buying real estate in Downtown Boston, adding contingencies to an offer gives consumers the opportunity to back out of their offers should certain, negative developments occur. Understanding the different contingencies that exist and the impact that these can have on property sales will give you the best opportunity to protect yourself and your financial interests during these major transactions.

What Are The Most Common Real Estate Contingencies

These are some of the clauses that you may encounter when buying a house. The home buying contingencies below should be completely understood before signing on the dotted line of a purchase and sale agreement.

Home inspection: often called a due diligence contingency, will give the buyer rights to have the house inspected. Most buyers will have a home inspection contingency in their contract. In extreme seller’s real estate markets, it is not uncommon for buyers to waive a home inspection as a way of sweetening their offer.
Obtaining financing: allows the purchaser to get the funds to buy the property from a lender of their choice. Unless a buyer is paying cash, the mortgage contingency clause is almost always found in a purchase and sale agreement.
Appraisal Contingency: You are waiting for a valuation and getting your loan from the bank. You need the real estate appraisal to be at a specified amount. An appraisal contingency will protect you by ensuring the property is valued at the minimum amount required by the borrower. Licensed real estate appraisers conduct appraisals that are hired by the lender.
Association contingency – if there is a homeowners association, there will often be a clause stating the purchase is subject to the successful review of the association documents and financials. Buyers will want to make sure they are comfortable with all of the rules and that the HOA is financially stable.
Sale of a Current Property
Boston condo buyers can make their offers contingent upon the sale of their current place. When funding from the sale of a current property is essential for financing the purchase of a new one, buyers have to account for the possibility that their current condo might not fare well on the market. This contingency provides a legal opportunity get out of a purchasing contract without suffering any financial loss. It is important to note, however, that this particular contingency is very unappealing to sellers given the amount of risk that it entails and the impact that it can have on the closing schedule. In competitive markets with limited inventories, this contingency can make it harder for buyers to get their offers accepted.

These contingencies need to be met for a contract to become ratified and binding. While these contingencies are waiting to be performed, the property is considered a contingent house listing. It will be marked in the multiple listing as “contingent” until all the contingencies are satisfied.

When a condition or action is defined, it must be met for the contract to be binding. If these conditions are not met in a purchase contract, one of the parties may decide to terminate the agreement. The meaning of contingent has slight variation differences from state to state, so check with your real estate agent for clarification.

Real Estate Contingencies Explained

Once conditions are met, this makes the contract enforceable, and it is too late to back out without incurring legal consequences. This could involve losing part or all of your earnest money deposit. Many real estate contracts will have earnest money as the relief a seller can get for a buyer not proceeding with a contract.

An appraisal contingency protects the purchaser by ensuring the appraisal is at a specific figure for purchase to proceed. The purchase price of the home is usually the threshold that must be met.
A financing contingency gives the buyer time to raise funds for the purchase, and if they can’t raise funds, they can be released from the contract without penalty. The mortgage contingency clause will specify how much the buyer is borrowing and when they need to procure their financing.
Home sale contingency is put in place when the buyer has not yet sold their own home. Purchasing is contingent on making the sale first. If you are the homeowner awaiting purchase, you may want to put a time limit on this clause when signing the contract. You won’t want it to drag on for months and miss out on other buyers. Home sale contingencies are often frowned upon due to their risky nature.
The inspection contingency is contingent on a satisfactory house inspection report. The purchaser will need to be sure that there are no major expenditures required immediately, like a new roof. If a new roof was required, it might cause the buyer to terminate the contract or alternately to ask the seller to pay for it.
A homeowners association’s document contingency gives you the right to back out of the sale if you find something in the documentation that is not to your satisfaction. Quite often, it could be finding out that the neighborhood is not doing well from a financial standpoint.

Additional Contingencies in Real Estate Sales

What is a Kick-Out Clause?

A buyer or seller can add the kick-out clause to protect against the house sale contingency. If a better offer comes along, a seller can move forward on a purchase agreement with a new buyer after giving the first buyer notice. The buyer with the kick-out clause in place will need to decide on moving forward in a specified amount of time. The time for a decision in a kick-out clause is usually 24-48 hours.

If the buyer does not exercise their right to move forward, the seller can move forward with a contract with buyer #2.

When working with a kick-out clause, it is not a bad idea to consult with a local attorney on crafting appropriate language. A kick-out clause is similar to the right of first refusal found in some real estate contracts.

Why You Should Pay Attention to Contingency Clauses

Real estate purchase and sale agreements are legal contracts. You must understand the details when buying and selling. Not only are huge amounts of money involved, but there is often an emotional investment as well.

Contingency clauses are there to protect you, whether you are buying or selling.

When you buy your house, the contract may say contingent on quite a few things. It is essential to work with an excellent buyer’s agent who will carefully craft appropriate contingencies to be inserted into the contract.

Whether it is a financing clause, home inspection, or some other contingency, it is crucial to stay on top of dates. You will need to make sure you follow all the designated contingency dates, so you stay within your deadlines.

By not providing notice by specified deadlines could leave you open to losing your deposits.

Contingencies Can Benefit Buyers and Sellers

You can make contingencies work for you whether you are selling or buying, as you want your transaction to run as smoothly as possible and complete in time.

So once you sell, there will be contingencies in place in the contract. A contingency is actually a condition that allows everything to move forward to completion. So it is useful when you are purchasing to have some specific contingencies in place to protect you.

Boston Real Estate Contingencies and the Bottom Line

A contingency clearly states expectations and dates. Both buyers and sellers should have a clear understanding of all real estate contingencies meaning. Not understanding a real estate contingency could either cause problems in your transaction or, in a worst-case scenario, a loss of funds.

It is especially important for first-time home buyers to have a firm grasp of common home buying contingency clauses.

Hopefully, you now have a better understanding of common real estate contingencies when buying a home.

Sale of a Current Property

Boston condo buyers can make their offers contingent upon the sale of their current place. When funding from the sale of a current property is essential for financing the purchase of a new one, buyers have to account for the possibility that their current condo might not fare well on the market. This contingency provides a legal opportunity get out of a purchasing contract without suffering any financial loss. It is important to note, however, that this particular contingency is very unappealing to sellers given the amount of risk that it entails and the impact that it can have on the closing schedule. In competitive markets with limited inventories, this contingency can make it harder for buyers to get their offers accepted.

Financing Contingency

All-cash buyers don’t need financing contingencies given that they already have the resources for purchasing the condo for sale in Downtown Boston they want outright. Buyers who will be working with mortgage lenders, however, should always having financing contingencies in place, even if their loans have been pre-approved. Funding from mortgage lenders is never guaranteed until loan applications have been reviewed by underwriters and approved for final processing. Should lenders opt to withdraw their offers of funding based upon last-minute research, prospective buyers can back out of their offers without having to pay any stiff penalties.

Inspections

Until properties have been thoroughly reviewed by licensed inspectors, buyers can never be sure that they’re getting fair prices or that they’re making wise investments. Inspections could reveal major problems that sellers were either unaware of or that they failed to disclose. Inspection contingencies are always recommended, even if buyers plan to make all-cash purchases or have special reasons for wanting to expedite the closing process.

Title Contingencies

A property title is a legal and official declaration of ownership. In certain instances, title research could reveal conflicts with ownership that make property sales extremely complicated. Title companies check the titles of properties to make sure that these are free and clear of all legal disputes before closing occurs. Should any unresolvable title issue exist, this contingency will prove necessary for giving buyers a legal way to back out of these deals.

Appraisals

Appraisals are official valuations of properties. These are used for taxation purposes and for establishing reasonable purchasing prices. Appraisal contingencies are often ordered by third-party lenders as a way of ensuring that homeowners are not overpaying for these investments and that home loans do not exceed the value of the properties that they’re financing. Appraisal contingencies can prove problematic in instances in which sellers are adamantly asking for more than property appraisers believe their place is actually worth.

Boston Condos for Sale Near Downtown Boston

Boston condos for sale near Downtown/Midtown Boston

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Condos around the Midtown area to rent:

Click here: Boston Midtown Condos For Sale.

Updated: Boston Real Estate 2021

Boston condos for sale: Home buying contingencies (Most Common in 2021)