Definition of Contingency:
Sale Contingency in Orange County:
These are conditions that must be included with an offer on a home and MUST be fulfilled before the transaction can be finalized. If a buyer or seller is unable to meet all of the stipulations to each contingency, then the offer on a home will likely become void – for Orange County agents these contingencies are something that must be examined and followed up with very closely. Contingencies usually include time horizons in which a buyer can secure a full refund of their earnest money back if the contingency isn't fulfilled before this very real deadline. Here is an example; if a buyer schedules a home-inspection within the time specified on his contract and decides that they need to make too many repairs, they can rescind their offer and get their earnest money back – this happens in Orange County way too frequently!
Here are the most common contingencies:
Financing Contingency: The buyer must get approved for their mortgage loan, to be able to purchase the home. They are given a pre-specified amount of time to receive a loan pre-approval letter (if it is a solid commitment letter the only remaining contingency will be full title and appraisal) from a lender to confirm the approval of his loan application.
Inspection Contingency: gives the buyers the right to get the home inspected and negotiate further with the sellers if there are repair issues. The inspection usually happens 5 – 7 business days after mutual acceptance. This is gives them the “right” but this is done on every home sale.
Sale contingency: the success of the offer on a home depends on the sale of the buyer's current home. For a REALTOR® representing a seller, it is wise many times to accept back-up-offers in a situation where the seller has accepted an offer where there is a sales contingency.
Title Contingency: the offer depends on whether the title of the home that documents the history of ownership is clear of any liens.
Appraisal Contingency: the success of the offer depends on an appraisal confirming a value for the home that is equal to or greater than the buyer's offer amount. If the appraisal comes in less than the purchase price the lender will only lend on this new appraised value in Orange County.