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Contingencies You Should Always Keep in Your Contract (and Why)

a crumpled up dollar bill

Once you’ve moved past the excitement of purchasing your first home, it’s time to get down to brass tacks with your purchasing contract. While these contracts can seem complicated, there are many standard pieces you should always see, and one of the top things on your priority list should be your contingencies. You might be tempted to waive or get rid of these contingencies to sweeten the deal for the sellers, or because you just think they are unnecessary, but buyer beware. Contingencies are in place to protect you, and some should not be overlooked. Check out our list below of contingencies that you should always keep in your contract, so you can buy your first home without worry.

Inspection Contingency
Having an inspection contingency in your purchase contract should never be overlooked for many reasons. Having this in your agreement gives you legal leverage to void a sale if the home does not meet your expectations for a safe and healthy home. While the hope is that they find nothing wrong with the home, paying a professional inspector may allow you to spot major unseen issues in a home before it becomes yours. If problems are found, the inspection contingency allows you to back out of the sale, have the repair made by the seller prior to closing or negotiate the price of the home to make up for part of the cost you will incur fixing it yourself.

Appraisal Contingency
While this one is most important to your lender, it is also a very important contingency to have for you. Just because a home is for sale for a certain price doesn’t mean that it is worth that much. When your lender asks for an appraisal, they are asking an impartial expert to come up with a value for the home based on many factors. If that value is too far below the purchase price of the home, your lender may not approve your loan. In fact, they will likely only approve a loan up to what the home appraised for, and you as the buyer will be responsible for making up the difference. Having this contingency in your contract allows you to remove yourself from the situation should the home not appraise at the asking price, and it also gives you a chance to negotiate the price with the seller.

Financing Contingency
Unless you are buying a home in cash, most home buyers need financing to buy a home in North Carolina. That’s where a financing contingency comes in. With this in your contract, the purchase of the home depends on whether you are able to get financing to purchase it. When you include this clause in your contract, you have an out if your mortgage loan falls through, and you’re not stuck footing the bill without a mortgage.

Other Contingencies to Consider
While inspection, appraisal and financing contingencies may be the three most important clauses to have in your contract when you buy a home, they are far from the only ones you should consider. Some other ones you might want to include are:

  • Pest inspection
  • Sewer inspection or well inspection
  • Mold, radon, asbestos or lead-based paint inspection

There are many things to consider when creating your home purchase contract, and a trusted real estate agent can help you navigate through all of them. The NC Housing Finance Agency hosts a list of preferred real estate agents who are well-versed in the Agency’s affordable home buying products, which can help you ensure you can buy a home you can afford.

For more information about buying a home in North Carolina and all the ways the NC Housing Finance Agency can help make home happen for you, visit