If you’re planning to purchase a new home, it’s ideal to think of selling your existing home before transacting a new one. Selling your existing property would in turn become your new budget resource for finding a new home.
But this isn’t necessarily the best option in all cases. In rare occasions, the market conditions suggest buying your prospect home before selling your existing property.
How can you do that? Where will you get enough resources?
This is where Contingency Contracts come in.
A contingency contract is required for a home buyer to buy first before selling. The contract supports the idea that the buyer’s home must sell first before coping with the obligation to complete its purchase with the seller.
It sounds too good to be true – because it is, at least at an angle. Contingency contracts are a great deal for buyers but rather a risk for sellers. This is why most contracts are heavily detailed and specific for all kinds of possible cases that could occur.
Contingency is a common real estate element, but its definitive would typically rely on each state. While most US states use a similar global contingency requirement, some have a few more detailed conditions.
Typically, a time frame agreed by the buyer and seller is set. This may range from a month or two; Wherein if the buyer fails to sell his existing home for the new one, the deal can be cancelled.
Within the article, we will discuss the additional Contract Contingency Clauses in Florida’s Real Estate Transactions:
72-hour kick-out clause
Most seller disapproves a contingency period exceeding a month. Mainly because finding another likely buyer to purchase the home without any contingency contracts can be easier. The 72-hour kick-out clause, however, is widely considered that allows the buyer a total of 72 hours of contingency before the contract becomes null.
Financing
Many contingencies depend on the buyer being able to finance a contract. Within this case, an interest rate limit is agreed upon and included. Both parties can easily bail from the contract if one finds the interest rate to be unwanted and a deal breaker, regardless if the finance can be covered.
Home Inspections
“Contingent upon satisfactory completion of inspection” can be one of the most common cases existing. Though this phrase can be vast, it’s on your contingency contract to specify the specific types of inspection included. Usually, this covers inspection for hidden defects, pest inspections, water/sewage inspections, etc. The timeline given within the contract may vary to what agreed but usually falls under 5-7 inspection days.
The results of the home inspection can be detrimental; Bad results can cover an ethical bail from the contract if the results are greatly unwanted.
Appraisal
It’s best to expect an added appraisal if you’re thinking of getting a contingency contract. While this is not exactly required per se, formal appraisal rates or above purchase rates are highly valued and are one of the reason to lock down the new property. Most lenders would want an addition appraisal rate to perform while sellers nearly always don’t have issues with this.
Above all else, remember that contingency contracts are nothing new and like everything else in real estate, can always be negotiable.
Buy Like Rent is a Real Estate Agency based in Florida with an experience for over 50 years in rent-to-own, buy and sell, property investment, real estate brokerage, and mortgage banking operation services.
Buy Like Rent is your dedicated Real Estate broker with over 50 years of experience in selling residential real estate, buylikerent homes, and property investments.
