Knowing Your Exits

You know those typically boring monologues when you’re about to take off on a plane where they make sure you know exactly where all of the exits are in case of an emergency? Well…much like the necessary airline spiel…you too should be aware of your exits in any contractual negotiation. Backing out of a contract is not a frequent occurrence but one that crops ups time to time and the reasons could be for a multitude of things:   Buyers’ remorse has them waking it up in cold sweats all night long.   Their employer just informed them they are reducing their workforce.   The personal relationship that was the catalyst for the move has hit the rocks and everyone is jumping ship.  Whatever the reason, if you’ve used a Realtor® to secure a contract on a home, thankfully that contract typically has options that will allow you to walk with your earnest money in hand!  The 3 typical contingencies in play: 

Home Inspection is usually the first-time sensitive contingency: Our standard purchase and sale agreements allow a buyer to have up to X days post binding agreement to complete a home inspection by a licensed inspector.  Once that is performed, you can do one of three things:  1) accept the house “as is” 2) negotiate the repairs or3) cut contract and have your earnest money returned to you.    

Appraisal is another contingency clause where if the appraised value does not meet the agreed upon purchase value, you can rinse and repeat your options of 1) pay the difference between appraisal and purchase out of pocket 2) renegotiate the purchase price or 3) cut contract and have your earnest money returned to you.

The last standard contingency is financing.   If, for any reason during the contractual period, your lender declines you for the loan needed to purchase the home…you can walk with your earnest money in hand. 

Of course, all of this is dependent on how your offer is structured, whether your earnest money is non-refundable or if you waive any of the contingencies listed above.  Cutting a contract without these contingencies or outside of them will likely result in losing your earnest money and possible litigation.   Another reason why you should always hire a Realtor® to help you navigate the buying process! 

If you or someone you know is thinking of buying a home in 2023, let’s talk!