A contingency is a clause in a purchase/sale agreement that outlines certain acts or requirements that must be performed in order for the contract to become legally enforceable and take effect. The majority of such contracts contain contingencies, which affect both buyers and sellers. Since contingencies stipulate that a certain action must occur before the deal can be finalized and closed, it’s important for both buyers and sellers to realize what they’re getting into. So, whether you’re buying or selling a home in Irvine, here’s everything you need to do about contingencies.
Common Types of Contingencies
The sale and settlement contingency and the settlement contingency are the most common forms of contingencies that have to do with buying or selling a house in Irvine (though there are others that usually have to do with repairs). So, let’s have a look at it. . . .
SALE AND SETTLEMENT CONTINGENCY
“A sale and settlement contingency, as the name suggests, is based on the buyer selling their property. If the buyer has not yet obtained and approved an offer to purchase their current house, this form of contingency is used. In general, this form of contingency enables a seller to continue selling the home to other prospective buyers with the stipulation that if the seller receives another bid, the buyer will be given the option to withdraw the sale and settlement contingency within a defined period of time (typically 24-48 hours).”
The contract is then terminated if the buyer is unable to eliminate this contingency. The seller may now consider other offers, but must refund the earnest money deposit to the buyer. You should reach out to a Irvine agent at (714) 701-8210 for a more detailed description.
“If the buyer has already sold their land, has a contract in hand, and a closing date on the calendar,” this form of contingency is used. The buyer is covered by a settlement contingency if the transaction falls through – a property is never fully sold until it closes.
“The contract is still valid if the buyer’s house closes by the deadline. The contract may be terminated if the home does not close.”
What Buyers Need to Know
Contingencies have an impact on both buying and selling a house in Irvine. But here’s what buyers need to know . . .
Many homeowners are upgrading and must sell their current home in order to purchase a newer, larger, and better one. A “home sale contingency” allows buyers to sell and close their current home before committing to a new one. When waiting for their own home to sell, investors may stop buying two homes and getting two mortgages at the same time. A home selling contingency can also promote a smooth transaction by allowing the buyer to sell one home and then move into the next since the new home is already “locked in.”
This form of selling contingency will give buyers a great deal of ease. They will, however, be responsible for other costs associated with home ownership, such as inspection and valuation fees.
Buyers in this situation may have to pay more for the home if there isn’t a contingency in place. That’s because the seller is taking a gamble by betting on the buyer’s ability to sell her current home, and she hopes to be paid for doing so. After all, if the buyer is unable to sell her current property, the seller’s deal will be cancelled.
What Sellers Need to Know
Now, if you’re selling a house in Irvine, here’s what you need to know about contingencies . . .
A sale contingency, as we just described, can be risky for sellers because there is no guarantee that buyers can sell their current home. “Even if the contract allows the seller to continue selling and accepting offers, the home could be listed as “under contract,” making it less desirable to other potential buyers. Many people searching for a home would avoid properties that are under contract because they don’t want to waste time and risk falling in love with something they will never be able to afford.”
Until agreeing to a sale contingency, as a seller, you should think about the following aspects of the buyer’s home that she wants to sell:
- Is the house still on the market? If not, this is typically a red flag, since it means that the potential buyer is also considering purchasing and selling.
- Is the home priced to sell?
- How long has the property been for sale? If it’s been on the market for a long time, it may be due to incorrect pricing or significant issues with the house.
Your Irvine agent can help you make these critical determinations. Just call (714) 701-8210 to discover more.
If the buyer’s current home has been on the market for some time, however, a selling contingency may be useful if you set time limits for the sale. “A deal with a contingency is still a contract, and there is a risk that the property will sell if the seller has had trouble finding a buyer. In certain cases, restricting the time a buyer has to sell a home to one to four weeks is a smart idea. This puts pressure on the buyer to lower the asking price and close the deal, while also keeping the seller from wasting time if the deal falls through.”
The Best Step for Buying or Selling a House in Irvine With Contingencies
House Buyers Southern California. Essentially, when purchasing or selling a home in Irvine, contingencies primarily protect buyers while exposing sellers to some risk. To make matters even more complicated, contingencies are a condition in a legally binding contract, and the specifics must be carefully set out. As a consequence, whether you’re a buyer or a seller, you must be mindful of all contingency information and their legal ramifications.
The problem is that most buyers and sellers lack the requisite experience and expertise in this field. That’s why getting an experienced local agent by your side is so vital. So, if you’re buying or selling a home with contingencies in Irvine, send us a call at (714) 701-8210.