23 - What are contingencies?

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This is any type of clause in the contract that states that either the buyer or the seller can get out of the contract without losing earnest money if there is something not of their satisfaction.

An example would be an inspection contingency, especially with properties that need work done on them. Professionals would be brought in to check how much would be needed to fix everything up. If the price is more than what the buyer anticipated or the seller provided, then the buyer can get out of the contract without losing earnest money.

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Fernando O. Angelucci is Founder and President of Titan Wealth Group. He also leads the firm’s finance and acquisitions departments. Fernando Angelucci and Steven Wear founded Titan Wealth Group in 2015, and under his leadership, the firm’s revenue has grown over 100% year over year. Today,

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So what are contingencies in a contract? So, contingencies are going to be any type of clause that states that either the buyer or the seller is able to exit the contract without losing any earnest money or gaining any earnest money in case something is not to their satisfaction. Typical contingencies that you'll find in a retail sale will be mortgage contingency. So that is the first contingency we usually see, and that's when the buyer says I would like to buy this property. If my lender says, it's okay that I can buy it. If the lender says it's not okay, then I get all my earnest money back, and the contract is canceled. Other types of contingencies that you may find in a contract will be an inspection contingency. Especially for properties that need work on them, the buyers will usually either bring an inspector or a contractor.

And those professionals will then create a report saying, here are the things that we found wrong with the property, here's how much we think it's gonna cost to fix it. And if these errors more than what we expect or more than what the seller had expressed or implied, then buyers able to exit from the contract and retain their earnest money. Another contingencies that we see quite often is pests contingency. So this is gonna be for termites or rodents or ants, anything like that. You know, termites can do a lot of damage to property. So this is one of those things that you don't necessarily see the evidence of unless you have a trained eye. Another contingency that we see in contracts will be subject to a prior sale or subject to another closing.

So for example, if a buyer would like to buy a property, but they don't have the funds to buy that property until they sell their own house, they'll put a contingency in that contract that says. I'll buy your home once and if I'm able to sell the current home that I live in now, now, as investors Effortless Home Buyers, we do not have any contingencies in any of our contracts, when we come and we see the house with you, we'll walk through the property, we'll do our repair cost estimate, we'll give you an offer and that offer is solid and it will not be subject to any type of change. If we need to exit the contract for whatever reason, you get to retain our earnest money as you know, good faith and for your time and effort. So that is what contingencies are in real estate contracts.