Offer and counter-offers go back and forth and the buyers and sellers finally reach an agreement on price. The homeowners breathe a sigh of relief, knowing their home is finally sold...or not!
Let's Make A Deal
While price may be the major issue in reaching an agreement, there may still be hurdles to overcome before the deal becomes a closed transaction. More often than not, there are additional conditions, known as contingencies, which must be cleared, before the sales contract is enforceable. Each contingency will include an action and a date by which it must be met or removed and an understanding of who is responsible for covering any cost incurred. If the contingency cannot be met, the buyers may escape the contract without forfeiting the deposit. The most common contingencies deal with mortgages and property inspections.
In addition to obtaining a loan commitment by a given date, the mortgage contingency may stipulate specific terms, such as 30-year, fixed rate, at a given interest percentage. Failure to qualify financially is the most obvious reason for being unable to obtain a mortgage. However, particularly in the current environment of falling home prices, the loan commitment may be denied because the property does not appraise at a high enough value.
The buyers will want a home inspection done to determine the physical and systems condition of the property. The inspector will examine such structural conditions as roof, windows, siding and foundation, and systems conditions, including plumbing, heating and electrical. Other inspections may include testing for water quality, pest infestation, radon, lead paint and asbestos. Depending on the property, the buyers may also require inspections of the oil tank, septic system, well, pool and tennis court.
If any unacceptable conditions are discovered, the buyers may ask for them to be remediated, be given a credit or have the contract cancelled. There will be a specified time period in which to resolve the situation or terminate the sale.
In some cases, the contract may include a property sale contingency. In this instance, the buyers will make the sale contingent on their being able to sell their current home. In some areas, this is known as a Hubbard Clause. Other contract limitations may include contingencies that are only applicable to a particular property.
Most agents will advise their homeowners to remove and replace any fixtures they want to keep, before they put their home on the market. The buyers may acknowledge that the chandelier, sconces, etc. are excluded from the sale, but having seen the item, they may require that a comparable fixture be installed in its place. Guaranteed, if Grandma's chandelier is still in place, and the sellers can't bear to part with it, it will become a condition (contingency) of sale.
On a rare occasion, a contingency will make it into the contract, based on an erroneous assumption. Such was the case of a contingency stating that the sellers had to kill and remove the poison oak vine, growing around a large tree. It turned out that the objectionable growth was a Climbing Hydrangea Vine that the homeowners had a local nursery plant and train, to climb the tree.
This contingency will heretofore be known as the
Copyright © 2009 Marilyn Katz, WestportCTProperties.com, All Rights Reserved... Real Estate Sales and the De-Vine Contingency