Contingencies That Matter When Buying A California Home

In the competitive California housing market, you may try to do just about anything to get the seller to take your offer. One of the first things many buyers try to do is drop contingencies in the contract. You may think that you’re giving the seller an easier time by doing this. You are, but it’s not a good idea for you as a buyer to drop these crucial protections. There are plenty of ways to get a seller to take your offer seriously. Read on for some of the contingencies that you should always keep as a California homebuyer. 

The Inspection

Your real estate agent will recommend that you get an inspection. As a buyer, you have a right to have the property you’re about to purchase checked out for any issues. You have a specific timeframe (about seven days) to have this completed once the purchase and sales agreement is signed. After the completion of the inspection, you can ask the seller to have repairs completed for you. The seller will either agree to your requests or make you a counteroffer. The seller can also refuse to do any repairs (which usually isn’t to his benefit). After the inspection, with the contingency in place, you have the right to back out of the sale and get your earnest money deposit back.

Appraisal Contingency

The appraisal contingency is often the most critical contingency. This is because to buy a home; you must put tens of thousands of dollars up front. This contingency can also save you this money in the long term. Here’s why: financing is based on an appraisal. When you buy a home, you put in an offer based on the asking price for the home. Your lender will then order an appraisal for the home. If the assessment comes in at a lower amount than what you’re paying for the house, you’ll need to come up with the difference. In some cases, this could be many thousands of dollars that you’re responsible for. With an appraisal contingency, you are off the hook if the appraisal comes in too low. Explicitly, the clause usually states that the appraisal amount comes within 5-10% of the purchase price of the home. From here, you can determine for yourself if you are overpaying for the property and if you should back out of the sale altogether. 

When you’re buying a California home, it’s essential to get all of your contracts for a smooth purchase.