When you submit an offer on a home (or receive an offer to purchase your property), the offer comes in the form of a Purchase Agreement. The standard purchase agreement includes three different contingencies. These are essentially “conditions” that are in place (until they expire or are removed by the offerer) and allow the buyer to not complete the purchase without losing their monetary earnest deposit money (money provided with initial offer).
- Inspection Contingency – Period of time (typically 17 days) allotted to perform due diligence on the property. This includes conducting property inspections (i.e. – general inspection, or specific ones like pool inspection, roof inspection, etc.), review of any CC&Rs (Covenants, Conditions, and Restrictions) documents, and any other property disclosures available.
- Appraisal Contingency – Period of time (typically 17 days) to conduct an appraisal to verify the value of the property. This is typically a requirement from the lender. The lender wants to make sure that if there is a case where a borrower defaults on the loan, they are able to recover their investment.
- Loan Contingency – Period of time (typically 21 days) Buyer has to be fully approved for a loan in order to purchase the property.