Mortgage Lending Library
A contingency period is an amount of time that is given to satisfy the contingencies that were written into an agreement to sell a home. Usually, when an offer is made on a property, there are some contingencies listed in the purchase contract. These may essentially state that the buyer is willing to buy the home provided that certain conditions are met. These conditions may include selling an existing property, securing a loan, or conducting a home inspection to make sure that there is nothing wrong. The basic idea is that these conditions must be met in the agreed-upon way – and within the contingency period – in order for the sale to go through. When the home market is competitive, sellers usually stipulate that a contingency period be short, especially in cases where there are only a few contingencies. A buyer may have a contingency period of only three days to a week to get everything done. One of the first things that needs to be done is an appraisal. This will be important for both the loan approval and for financing. In some cases, too, the first down payment may be due before the contingency period ends, so taking care of financial matters fast is important. Home inspections are also vital in a contingency period. While many home buyers are worried about a new home loan, mortgage refinancing for an existing loan, or other matters, if a home inspection reveals hidden liabilities or problems, that may very well halt the sale or mean price renegotiations. Inspections are so important during the contingency period that it is vital to hire the very best home inspector possible. A good inspector should be able to check all the major systems of a new property during the contingency period, including water heating, insulation, ventilation, plumbing, electricity, waste disposal, water sources, foundation, pests, ceilings, walls, roof, floors, windows, and water quality. If repairs are needed, the inspector should be able to submit a detailed written estimate of the costs during the contingency period. The contingency period is an important part of buying a home, and a part of the buying process that no home buyer can afford to overlook.