If you have ever bought a car on an eBay auction, you know the risk. You agree that, if you win, you will pay the vendor, whatever happens. If you turn up and the car belches blue smoke or has a loud death rattle, you are committed to handing over the cash.
When buying a home, you could end up in a similar situation if you are not careful. Even though you may have seen the house, you should not agree to buy it without inserting some contingency clauses. These clauses allow you to back out of the purchase if there are problems.
These are some of the contingency clauses to consider:
- Survey contingency: You should always have a survey done before buying a property. An expert can spot structural issues or issues with the ground the house stands on.
- Finance contingencies: If you cannot raise the finances, you cannot make the purchase. You can insert a variety of clauses to cover the situation where you cannot sell your existing property, get a mortgage or get the mortgage at the quoted rate.
- Valuation contingency: There is little point in paying $300,000 for a property worth $200,000. It can be hard to know the real worth of a property until you have it professionally valued. Remember, your mortgage lender will only lend you based on the true value.
- Title contingency: Buying a house without a clean title invites a world of problems, which may well be why the house is up for sale.
Always seek the help of an experienced real estate attorney when buying a new home. Their knowledge can help you avoid costly mistakes.