Fremont Buyers – Use Contingencies Wisely Part 1

I have recently had many clients ask about what contingencies are in a real estate purchase agreement and how best to use them so they are protected and get a good deal. So I have put together a series of blogs to explain what they are and the best way to use them.

 Everyone is familiar with the conversation where the other person says, “Yes, but...” This person is agreeing with you but only if certain conditions are met. Well a purchase agreement is similar in that you are agreeing to buy a property subject to certain conditions being met. The conditions you set are called contingencies.

It is very uncommon to have a purchase agreement in Fremont without contingencies. In fact, contingencies are an essential part of many offers for homes in Fremont. In general, contingencies are added to protect you (the buyer) but may also serve to protect the seller.

All of the contingencies of a purchase agreement must be met before a Fremont home sale can be competed. In this first series I will discuss some examples of contingencies and the most common ones in a Fremont purchase agreement.

What are Some Examples?

Contingencies can be virtually any conditions you wish to set. They can be anything such as having your Uncle John approve the central furnace or your Aunt Mary is satisfied with the kitchen sink. The sale is “contingent” upon all of the conditions being met. Contingencies are also called “subject to” since the sale is “subject to” something happening. Now keep in mind just because you put in a contingency doesn’t mean the seller has to agree so only use contingencies that are important to you so you don’t lose out on the deal.

One of the most important contingencies is a financing contingency. It states that the purchase is subject to the buyers being able to obtain a loan for the required amount. If you cannot get the loan you need, the sale is canceled and your deposit is refunded. It is very important to have this contingency since you will lose you deposit if you are unable to get a big enough loan. Making an offer without a loan contingency is very risky.

What are Some Common Contingencies?

There are many contingencies that will protect you (the buyer). Here are some you will definitely want in your Fremont purchase agreement:

* You will be able to inspect the property and have your own Fremont home/termite inspector look at the property and you must approve of the inspection.

* The sellers must disclose problems with the property and you must approve of such disclosures.

* You will be allowed to make a final inspection of the property just before the deal closes and confirm that there is no new damage since you originally inspected it.

* You will get your deposit back if the sellers back out.

* You can back out if you are unable to get financing.

Depending on your situation, there are many other contingencies you should add. For example, if you are moving to the area because of a new job. You will want a contingency stating that if you don’t get the job, you can cancel and get your deposit back.

Make sure that you clearly state your needs to the Fremont agent preparing your agreement. If there are any special conditions that must be meet (such as being able to cash in some stocks for a down payment), make sure it is in writing a contingency. Otherwise you may be unable to complete the purchase on time and lose your deposit. In some cases, you may be sued by the sellers for performance. They may demand you complete the purchase or pay associated damages.

Thank you for taking the time to read the information I have made available to you. This information is brought to you by your Fremont real estate expert Clyde Brown.  If you are considering buying or selling property, planning to relocate, looking for Fremont homes for sale, or looking for any other information about real estate in the Fremont real estate market, or the surrounding areas, please visit the most complete website dedicated to everything real estate related www.ClydeBrownHomes.com.

If you or someone you know are in need of a competent and experienced Bay Area Realtor, or have real estate or mortgage related questions, please feel free to contact me I will be more than glad to answer your questions. Call me at 800-839-0665 or email me at Clyde@ClydeBrownHomes.com. For all your East Bay cities needs including Fremont, Newark, Union City, Hayward, Oakland, Santa Clara, Milpitas, Dublin, Livermore, Pleasanton, and San Ramon. Clyde Brown Legacy Real Estate & Associates.