When the housing market is up and sales seem to favor sellers rather than buyers, negotiation contract contingencies may seem like a lost cause. But there are always cases where you as the buyer can effectively negotiate purchase protection into the contract of your home, and you may even be able to convince your seller to throw in a few perks. Here are some tips to negotiating contract contingencies from the seller.
Common Contract Contingencies
Knowing what contingencies are often included in home purchase contracts is the first step in getting what you want from the seller. There are a number of contingencies that are commonly included in contracts, and while this list is not exhaustive, it can give you a good idea of what you may want to consider.
Appraisal—This is usually required by your lender, and while traditionally it is the responsibility of the buyer, you can get it covered by the seller.
Home Inspection—This important step can find any major problems with the house or property that could cause a decrease in value, or make it an unwise investment.
Loan Contingency—This is a term in the purchase contract that allows a buyer to back out of the contract if, after making a good faith effort to obtain a loan, the buyer is unable to obtain the loan. The buyer must remove the loan contingency (agree to proceed with the transaction) within the stated amount of time or withdraw from the contract. If a buyer withdraws from a contract because of failure to obtain a loan, generally the buyer is entitled to a refund of his or her earnest money deposit, less any costs actually incurred.
Early Occupancy Agreement—This agreement can speed up the usual 60-day closing period by allowing you to move in faster.
Existing Home Selling Clause—This clause makes the purchase of your new home contingent on your selling your existing home. This prevents you from being in a situation where you may be paying two mortgages at once.
How To Negotiate Contract Contingencies
In most cases if the seller is happy with your offer, and is looking to sell their home hassle free, they are likely to offer at least a few contingencies to a buyer. The best approach is to inform your agent of any contingencies that are an absolute necessity for you, such as an existing home selling clause, so they can clearly express this to the seller and the agent representing them.