Every home hunter wants to make a successful purchase. For most, that means finding the perfect living space—and getting a great deal. Of course, price is almost always an important factor for buyers. That said, there are several other considerations that shouldn’t be overlooked. One of the most crucial is the home-buying conditions that a seller will agree to include in your contract.
If you’re preparing to buy a property, here’s what you should know about home-buying conditions…
What are home-buying conditions?
Put simply, a home-buying condition is a specific criterion that must be met for your purchase to be finalized. For example, a financing condition states that you aren’t legally obligated to go through with your transaction if you don’t receive a mortgage from a lender. Conditions are included in the agreement of purchase and sale that both you (the buyer) and the seller will sign.
One of the most important things to know about home-buying conditions is that they can protect you. In the example above, a financing condition could ensure that you wouldn’t lose your earnest money deposit if you were unable to obtain a mortgage. It’s important to note that you’d still be expected to make every reasonable effort to meet your end of the bargain (which means diligently pursuing the financing you require).
Common types
There are many potential home-buying conditions, but some come up more often than others. One of the most common (described above) makes a purchase contingent upon the buyer’s ability to obtain mortgage financing. Another frequently-used condition has to do with appraisals. The amount you receive in financing will depend partly on the appraised value of the home you’re planning to buy. If that sum falls short of the agreed-upon sale price, the mortgage you are granted may not cover the entire cost of your property. With an appraisal condition, you can back out of the deal if this happens.
Inspection conditions are also common. If you include one in your contract, you won’t be obligated to complete your deal if your home inspection turns up less-than-satisfactory results. When it comes to condos, buyers often choose to make their purchase contingent upon a successful status certificate review. This crucial document (which includes a condo’s bylaws, rules, and more) should be viewed carefully by a lawyer.
Should you waive or include them?
One of the biggest questions that purchasers have about home-buying conditions is whether they’re truly necessary. The truth is, in a hot market, there are times when it may make sense to leave some (or all) of these stipulations out of your contract. When a seller has more than one offer on the table, they may find the one that’s least complicated to be the most attractive. In other words, waiving your conditions could help you secure that hot property that several other buyers are vying for. Of course, it’s important to remember that this move can be risky—and in some cases, it could even lead to worst-case scenarios (like financial hardship, or a home that contains a major defect).
In general, exercising caution is key. There are many ways to make an offer more appealing, and removing your home-buying conditions doesn’t have to be one of them. If you’re thinking of taking this step, your agent can help you assess the risks involved in order to make the best decision possible.
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