Contingencies to Consider When Buying A Home

When you make an offer on a home, your offer often includes conditions in a contract. These conditions, in real estate, are also known as "contingencies". However, most agents in Ontario use the term conditions. There are many that you can choose to include or exclude to make your offer more palatable to a seller. Here are three that we think you should strongly consider when buying a home.


 

Inspection Contingency
 

A home inspection allows you to get a full picture of the condition of the home that you intend to purchase. A home inspection can be basic, in-depth, depending on your level of security. The traditional home inspection examines the interior and exterior of the home, as well as its systems. If you want an extra layer of protection, you can also ask for a mould or pest-damage inspections. With a home inspection contingency, you'll have a clearer picture of how much work needs to be done to the home - giving you a better sense of how much opportunity you have to negotiate with the seller on repairs. You can also make a contingency that says you can walk away from the sale if you don't like what you see in the report from the home inspection.


 

Financing Contingency
 

Most folks plan on using a mortgage to purchase their home. If this is the case, you will definitely want to elect for a financing contingency. This contingency allows you to look for alternative sources or to back out of the sale if you are unable to receive financing from your Plan A mortgage lender. This is an especially good contingency to have if you are a first time home buyer, as it is easy to think that once you receive a pre-approval you will necessarily be approved for a mortgage. Unfortunately, this is not the case - a pre-approval is not a guarantee of a mortgage approval. The trouble comes in the underwriting process where a financial advisor will take an in-depth look at your financials and they will provide a list of their own conditions in order for you to receive the mortgage.


 

Title Contingency
 

In real estate, the title to a home is the record of its ownership. This legal document demonstrates who has owned that particular property since the day it was built until the present day. It also records any liens or judgments that have been made against the property. A real estate lawyer will normally review the title on your new home to ensure there are no issues and you can have it transferred into your name free and clear. However, there are a few occasions where problems with the title report cannot be solved before closing. That's where the title contingency comes in. It gives you the option to leave the sale rather than having to deal with the possibility of contested ownership or having to pay off someone else's debts. 

 

This is by no means a comprehensive list of contingencies you should consider. Please reach out to someone on our team and we would be happy to discuss with you other contingencies you should consider when buying a home!

Thank you for reading today’s BLOG!



 
 

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