Contingency Plans can Help you Safeguard Big Investment
The process of buying a house property is very critical because of various factors. Such factors can suddenly pull you away from the chance of acquiring a new property, and can even take your earnest money with it. Of course, you would not want that to happen just because of unforeseen factors. Moreover, you also do not want to spend more than what you should. Thus, you should not forget to secure few contingency clauses on your initial contract, for you to keep your big investment safe through the process.
What are Contingencies?
Contingencies are plans that could keep you or your investment safe through risky processes. In buying a new house property, for example, you need to secure your expenses for it, or else you will surely have to pay far more cash for factors that you have not expected.
This is where contingency clauses in contracts play big roles. If there are unfavorable factors that came across through your transaction, you can still go away with your earnest money from it. There are even instances that the seller should cover some expenses to comply with the contingency.
Some Contingency Considerations You Can Think About
Some of the contingency clauses you can place in your contract for buying a property are:
Home Sale Contingency
You need this contingency if you are selling a house property that is currently yours, for you to buy the new house. If you fail to sell your current property on a certain period, you can take your earnest deposit and cancel the transaction of buying the new one.
You do not want to buy a house that has serious damages, as it can cost you more money than you have invested in the purchase. Adding inspection contingency clauses to your contract can require the seller to fix all the damages in the property that will be spotted through the inspection. This means that you do not have to spend more cash on repairing or replacing such uncertainties in the property after you acquire it.
Sometimes, acquiring loans and mortgages for buying a house do not go as expected. This could leave you without enough cash to pursue buying a house, or you should find a new mortgage offer somewhere. However, you could have the option of withdrawing your investment cash, providing that you have included it in your contingency clauses. As long as it is under the contingency period, you can withdraw it up when the mortgage or some other loans did not go with you through the process.
It could be a problem when the appraisal comes in lower than the sales price of the property. You can try to renegotiate, pay it up front, secure another loan or cover it up in some other ways. Fortunately, you can always withdraw your earnest cash if you have signed it under a contingency.
In simple words, this contingency will automatically declare you as the new owner of the house on a specified date, providing that you have gone through the complete buying process. This can let you transfer and occupy your new property on the said date and nothing that the previous owner can do to stop you.
Contingencies can certainly help you a lot in terms of securing your big investment as you go through the risky process of buying a new house property. Make sure you have the contingency clauses on your contract for you to sign so that it could protect you properly when the situation requires.
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