Franklin TN Home Buyers That's What Contingencies are For
If you are preparing to buy or sell a Franklin TN home, then you need to understand contract contingencies prior to entering into a residential sales agreement.
Contract contingencies are primarily in place to protect the rights of the buyer. They give buyers the opportunity to withdraw from a contract should the contingencies not be satisfied. For example, in the case of a financing contingency, if a buyer is unable to obtain a mortgage, he is entitled to a reimbursement of his earnest money and the contract is voidable. There are often timelines by which the contingency must be satisfied.
The most common contingencies buyers and sellers will find are:
- financing contingency - This protects the buyer's earnest money should he not be able to obtain financing for a mortgage loan.
- appraisal contingency - This protects the buyers from paying more for the house than the appraised value. If the appraised value is less than the purchase price, then the buyer has grounds to re-negotiate the purchase price to the appraised value or it becomes a voidable contract.
- home inspection contingency - The sales contract may be contingent upon the buyers obtaining inspections of the home. Inspections may include those for wood-boring insects, lead-based paint, structural and mechanical systems, septic systems, radon testing and other operations of the home.
- sale of home contingency - A buyer may make the sales contract contingent upon the sale of his current home. This protects the buyer from owning two homes at the same time and also helps ensure the availability of cash to the buyer for the purchase of his new home.
A good buyer's agent will advise their clients to put contingencies in place to protect themselves from adverse conditions found during the course of a home inspection or appraisal.
Buyers need to know and understand their rights, On occasion the counsel of an over zealous agent may prevent a buyer from successfully getting a home under contract.
I recently had this occur with two of my listings.
In the first case, the agent was concerned about a crack that she observed above a window. She presented an offer that requested my client hire a structural engineer to provide written proof there was no structural damage to the home. Franklin TN home buyers that's what contingencies are for.
There was nothing to suggest that there was any structural damage. The buyer's agent kept referring to a crack that was a half-inch thick. However, neither my client nor myself could see such a crack.
I advised her the buyer would be protected by the home inspection contingency. I even suggested a home inspector who was a structural engineer and performed this type of analysis as part of his home inspection.
I spoke with this agent on more than one occasion over several days about this issue. She indicated that her client wasn't too concerned but she (the agent) was insisting that my client pay for a separate structural analysis and that it not be the buyer's responsibility. While the buyer was countering back and forth regarding this issue, a better offer came in.
The first buyer lost out on his dream home because of an issue that would have been covered during his home inspection. Upon completion of a home inspection by the second buyer, nothing adverse was found regarding the foundation.
The first buyer would have been protected by a simple home inspection contingency.
The second case was a low-ball offer received on a different property. I always encourage sellers to counter and my client did. It was a very reasonable counter and in keeping with the most recent comparable sales.
The buyer's agent came back with another counter. The buyer had moved very little from his original offer. When I asked what comparable sales she used to justify the offer, she cited examples from a cookie-cutter neighborhood where all the homes were the same on small lots. My client's home was custom-built on an acre lot--hardly comparable to the home sales she provided. Franklin TN home buyers that's what contingencies are for.
While my client was considering this counter, a better offer came in. The first buyer lost out because the recent home sales his agent used weren't really comparable to the listed property. When the appraisal was completed, the home appraised for very close to list price.
This buyer would have been protected by an appraisal contingency.
These buyers missed the opportunity to purchase their dream home because they did not fully understand that contract contingencies are there to protect their rights.
In both cases, the home inspection contingency and the appraisal contingency would have been favorable for the buyer's purchase of these homes.
The Franklin TN home market is experiencing a lot of activity right now. In many cases, multiple offers are being received on desirable homes. As home buyers, you need to understand that contract contingencies will protect you should anything adverse be discovered during the home inspection or appraisal. It may not be in your best interest to counter back and forth on these types of issues. Let the contingencies provide that assurance.
Afterall, Franklin TN home buyers that's what contingencies are for.