READY TO MAKE SOME MOVES?

Contingencies, Inspections And Appraisals

Contingencies

A contingency is a condition that must be met before a contract becomes legally binding. The buyer may  vet every aspect of the property before completing the purchase, per your purchase agreement and any relevant addendums. 

The buyer may :

• Inspect the property.  The buyer has the right to determine the condition of your property by subjecting it to a wide range of inspections, such as roof, termite/pest, chimney/fireplace, property boundary survey, well, septic, pool/spa, arborist, mold, lead based paint, hvac  etc.

• Obtain financing and insurance. Oftentimes, buyers will work with a lending institution to purchase property.  The lending institution will determine the property value and require a proper insurance policy coverage to cover this value. 

• Review all pertinent documents, such as preliminary title reports and disclosure documents, and identify a closing agent.

Inspections 

Most buyers will have the property inspected by a licensed property inspector and multiple specialists (for example roof, hvac, or structure). The buyer will need to schedule and complete these inspections within the time frame that was agreed upon in the effective contract to purchase.  The seller is required to allow buyer and buyer’s inspectors access to the property during reasonable business hours. 

Depending on the outcome of these inspections, one of two things may happen:

1. Each milestone is successfully achieved, and the buyer’s contingencies will be removed, bringing you one step closer to the close, or

2. The buyer, after inspecting and reviewing the property, requests a renegotiation of the terms of contract (either requiring seller repairs or an adjustment to the purchase price).

How do you respond objectively and fairly to the buyer when a renegotiation is demanded, while acting in your best interests? This is when a professional real estate  agent can make a real difference in the outcome of the transaction. 

Loan Approval and Appraisal

It's best practice, when possible, to accept a buyer’s offer who provides a pre-approval letter, or written loan commitment, from their lending institution. It’s a better guarantee of loan approval than a pre-qualification or no documentation from a lending institute.

If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. A buyer of a commercial property may also have a complete environmental audit performed and/or soil test, if required by the lending institution.

The Closing Agent

Conventionally, the seller selects the closing agent - either a title company or an attorney - whose job is to examine and insure clear title to real estate. If the buyer is not comfortable with the title agent, they can suggest an alternate.

After researching the complete recorded history of your property, the closing agent will certify that: 

1. your title is free and clear of encumbrances (eg. mortgages, leases, or restrictions, liens) by the date of closing; and 

2. all new encumbrances are duly included in the title.