Have you ever bought something from a store only to find you did not like it? Returning them was probably easy.
Things are not so simple when buying real estate. You need to take much more care. Once you agree to purchase something, your only choice to get rid of it may be to sell it on unless you include contingency clauses in your contract. Here is how they work:
When you sign the contract, you should be convinced it is the house for you. Yet, you can never be 100% sure until you carry out some final checks.
Contingency clauses protect you when the final checks do not turn out as hoped
They give you the option to walk away or renegotiate the price:
- Check you can fund the purchase: There is no point in getting into a 25-year mortgage when you struggle to pay from the outset. Include a clause that allows you to get out if you cannot secure a satisfactory mortgage.
- Check the sale of your own house will proceed: What if your buyer drops out? It happens all the time.
- Check you understand all the issues of the property: If you want to buy a house on a flood plain, a former toxic dump or with a gaping hole in the roof that is your choice. These sorts of problems can make for good deals, provided you know about them and can price your offer to account for any work needed. Include a contingency to let you retract your offer if the final survey turns up new issues.
Getting legal help to understand the implications of a real estate contract is crucial to ensure you are not tied into something you regret.