When making an offer on a piece of real estate, you have the option to add contingency clauses to the document to protect yourself. These essentially give you a way to walk away from the deal if the contingencies are not met. You don’t have to take as great of a risk when you make the offer.
Of course, the seller can also reject the offer based on your contingencies, so you need to weigh the pros and cons of each before including them in your offer. What are the top contingency clauses you should consider to keep your investment safe? Consider these:
YOU MUST SECURE FINANCING
If you have the money on hand to buy the property, you do not need to worry about this. If you’re going to get a loan to buy it, then you want a contingency saying that you’re not bound by the offer if you cannot secure financing. This can protect you if your financing falls through.
THE BUILDING MUST PASS INSPECTION
No matter how wonderful the building or property appears to you, have a professional inspection carried out. If the professional inspector finds too many problems, have a contingency allowing you to withdraw your offer. You should only have to buy if you approve of what you’re buying on all levels.
THE BUILDING MUST Appraise FOR THE EXPECTED VALUE
You need an appraisal that puts the value at close to the price you are willing to pay. If the appraisal is drastically lower, you don’t want to overpay, so you need to be able to step back from the deal.
These are just three examples. You may have many more options, depending on your situation, so be sure to consider them all carefully. Working with an attorney can be the smartest thing you can do when you’re making a real estate deal.