Contingencies in Your Purchase Agreement
Contingencies in Your Purchase Agreement
What else happens besides the home inspection during the Due Diligence time period? ( Aka- All the things you’ll learn about your home and didn’t know you didn’t really want to know).
The contract is contingent upon your approval of the owner disclosure documents which must be supplied to you or Masha (as your buyer’s agent), within three days of the purchase agreement being executed. IF it is not, you as the buyer have the right to to terminate the agreement.
Home inspections- Currently, in our state, homes are purchased in AS IS condition, but you as buyer still have the right to have inspections to determine if you would like to proceed with the purchase of the property during your due diligence period of investigations. IF you determine that you would like to ask the seller to consider making some of the repairs you deem important, we can prepare a Due Diligence Repair Agreement and share it with the seller along with inspections performed for the seller to consider. The key to this is that all agreements for repairs must be finalized and in writing in an executed agreement prior to the 5 PM deadline on the due diligence date. It is really important to be able to schedule and perform inspections as soon as possible when due diligence starts.
Appraisal Contingency- The contract mentions that during due diligence your lender can order an appraisal on your behalf to confirm the value of the property matches your agreed upon sales price. It doesn’t happen often but if the property appraises below the contracted price, we can ask the seller to consider changing the price to the appraised price value. A seller can agree, counter an alternative like splitting the amount and meeting halfway; or say” No”. If the latter occurs and you are not able, or willing to make up the difference between appraised and contract price, then you have the option to terminate the purchase agreement. Often times IF this happens one of the first two options occurs and we move towards settlement and close on your new house. Because this is one of THE most important inspections to occur during due diligence, and appraisers are often scheduled out at least a week, it’s VERY important to provide the appraiser’s fee when you submit your loan application. We also want to ensure the lender orders the appraisal right away.
Contingency of Your Loan-
If you are not purchasing your new home with cash that you have in an investment or other financial account, there is a box in the offer that we would check that specifically says the purchase of your new home is loan contingent upon obtaining a new mortgage loan. The lender MUSt be made aware of the due diligence date because loan approval must be given during this time period as with all other inspections.
Preliminary Title Report & Property Survey-
In North Carolina, your closing attorney will perform all title searches and confirm that there are no outstanding liens or unpaid judgements against the property. The attorney will also order your property survey from a professional land surveyor and confirm that there are no encroachments against the property; and assist us in working with the seller IF any are found, to remove them before settlement is recorded.
Homeowner Association Documents-
Covenants, Articles of Incorporation, Budget, Bylaws & Architectural Guidelines are available for your review and acceptance if your new home resides in a community that has association regulations and fees. During the due diligence process Masha and her client care coordinator will obtain and share these documents with you so that you have an opportunity to review them before the end of Due Diligence. Many HOA’s are professionally managed and have websites which are easily accessed so that documents can be reviewed at your discretion.
Once the Due Diligence has expired you are saying to the seller that you are closing on this property as outlined in the Offer to Purchase Agreement. After that date, failure to close escrow will mean losing your deposit unless an alternative written agreement is made between both parties prior to the end of Due Diligence.