Dear Esther - We just received a contract on our home and we are excited about packing and moving on. But our agent mentioned there are contingencies and that we should probably wait to pack until these are worked out. The buyers have an inspection and mortgage contingency. Does this mean they could back out on buying and get their money back? Signed – Ready to move on
Dear Ready to move on,
I think we all wish, once a contract was signed to purchase, that that would be the end of it. In buying a home, an agreement of sale is often negotiated three times. The first is the purchase price, settlement date and terms. The second time is often the inspection resulting in a report about the condition of your home. Agreeing on what you as a seller will fix as a result of this report is negotiable. The last is the mortgage contingency which, in this market, can be a problem since property values are substantially lower. Most mortgages require that your property appraise for the sales price. If not, you may need to negotiate a new price, usually the value given by the appraiser.
Your buyers can get all of their deposit money back and walk away from the signed contract if agreement cannot be made on inspections or if they are not able to get a mortgage. There are dates in the contract which provide deadlines for completion of the inspections and commitment of the mortgage. I suggest waiting to pack until you are satisfied that these items have been resolved and all deadlines are met.
Usually, when a contract is signed on a home, buyers are excited about owning the home. They’ve pictured themselves there, visually placing their furniture. They want to work through these issues to finally own it. Not only that, but agents and mortgage brokers are also working with you as they all benefit from the settlement of your home, which means you will usually be packing and moving on.
If you have real estate questions, feel free to contact me – Esther Prosser, Stoltzfus Realtors, firstname.lastname@example.org, 484.269.7153.