Real estate contracts are packed with legal terminology, but purchase contingencies are your ultimate safety net. Think of them as legal exit clauses that allow you to cancel the purchase contract and recover your earnest money deposit if specific conditions are not met.
The Three Main Contingencies
- The Inspection Contingency: Gives you the right to hire professional inspectors to evaluate the home’s structural, mechanical, and environmental health, protecting you from hidden defects.
- The Appraisal Contingency: Ensures that an independent appraiser values the home at or above your purchase price, protecting your investment if you are financing the purchase.
- The Loan Contingency: Gives you a specified window of time to secure final mortgage financing. If your loan falls through due to no fault of your own, your deposit is protected.
