Franklin TN Home Buyers That's What Contingencies are For

By
Real Estate Agent with Benchmark Realty, LLC (615) 495-0752 or www.TWRealtyGroup.net TN License #315195

Franklin TN Home Buyers That's What Contingencies are For

If you are preparing to buy or sell a Franklin TN home, then you need to understand contract contingencies prior to entering into a residential sales agreement.

Contract contingencies are primarily in place to protect the rights of the buyer. They give buyers the opportunity to withdraw from a contract should the contingencies not be satisfied. For example, in the case of a financing contingency, if a buyer is unable to obtain a mortgage, he is entitled to a reimbursement of his earnest money and the contract is voidable. There are often timelines by which the contingency must be satisfied.

The most common contingencies buyers and sellers will find are:

 

  • signing contractfinancing contingency - This protects the buyer's earnest money should he not be able to obtain financing for a mortgage loan.
  • appraisal contingency - This protects the buyers from paying more for the house than the appraised value. If the appraised value is less than the purchase price, then the buyer has grounds to re-negotiate the purchase price to the appraised value or it becomes a voidable contract.
  • home inspection contingency - The sales contract may be contingent upon the buyers obtaining inspections of the home. Inspections may include those for wood-boring insects, lead-based paint, structural and mechanical systems, septic systems, radon testing and other operations of the home.
  • sale of home contingency - A buyer may make the sales contract contingent upon the sale of his current home. This protects the buyer from owning two homes at the same time and also helps ensure the availability of cash to the buyer for the purchase of his new home.


A good buyer's agent will advise their clients to put contingencies in place to protect themselves from adverse conditions found during the course of a home inspection or appraisal.

Buyers need to know and understand their rights, On occasion the counsel of an over zealous agent may prevent a buyer from successfully getting a home under contract.

I recently had this occur with two of my listings.

In the first case, the agent was concerned about a crack that she observed above a window. She presented an offer that requested my client hire a structural engineer to provide written proof there was no structural damage to the home. Franklin TN home buyers that's what contingencies are for.

windowThere was nothing to suggest that there was any structural damage. The buyer's agent kept referring to a crack that was a half-inch thick. However, neither my client nor myself could see such a crack.

I advised her the buyer would be protected by the home inspection contingency. I even suggested a home inspector who was a structural engineer and performed this type of analysis as part of his home inspection.

I spoke with this agent on more than one occasion over several days about this issue. She indicated that her client wasn't too concerned but she (the agent) was insisting that my client pay for a separate structural analysis and that it not be the buyer's responsibility. While the buyer was countering back and forth regarding this issue, a better offer came in.

The first buyer lost out on his dream home because of an issue that would have been covered during his home inspection. Upon completion of a home inspection by the second buyer, nothing adverse was found regarding the foundation.

The first buyer would have been protected by a simple home inspection contingency.

The second case was a low-ball offer received on a different property. I always encourage sellers to counter and my client did. It was a very reasonable counter and in keeping with the most recent comparable sales.

money houseThe buyer's agent came back with another counter. The buyer had moved very little from his original offer. When I asked what comparable sales she used to justify the offer, she cited examples from a cookie-cutter neighborhood where all the homes were the same on small lots. My client's home was custom-built on an acre lot--hardly comparable to the home sales she provided. Franklin TN home buyers that's what contingencies are for.

While my client was considering this counter, a better offer came in. The first buyer lost out because the recent home sales his agent used weren't really comparable to the listed property. When the appraisal was completed, the home appraised for very close to list price.

This buyer would have been protected by an appraisal contingency.

These buyers missed the opportunity to purchase their dream home because they did not fully understand that contract contingencies are there to protect their rights.

In both cases, the home inspection contingency and the appraisal contingency would have been favorable for the buyer's purchase of these homes.

The Franklin TN home market is experiencing a lot of activity right now. In many cases, multiple offers are being received on desirable homes. As home buyers, you need to understand that contract contingencies will protect you should anything adverse be discovered during the home inspection or appraisal. It may not be in your best interest to counter back and forth on these types of issues. Let the contingencies provide that assurance.

Afterall, Franklin TN home buyers that's what contingencies are for.

Posted by
************************************************************************************ 
 
Tammie White, REALTOR®
TW Realty Group
Benchmark Realty LLC
318 Seaboard Lane
Franklin TN 37067
(615) 495-0752 Direct
Email: Tammie@TWRealtyGroup.net
 
 
This posting with the content written here and photographs displayed are the intellectual property and opinions of Tammie White of Benchmark Realty LLC. Any party who uses this material without the permission of Tammie White is subject to copyright infringement and possible lawsuit.
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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Charles Stallions 06/23/2012 04:52 AM
Topic:
Home Buying
Location:
Tennessee Williamson County Franklin Franklin
Groups:
Advice for Buyers
Tags:
contract contingencies

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John McCormack
Albuquerque Homes Realty * www.AlbuquerqueHomes.com - Albuquerque, NM
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Good morning Tammie -

Good explanation of what contingencies are.  I just wrote an offer Sunday morning with a contingency hinging on proof of the home buyer getting a job in Albuquerque.  He has the job but is waiting on written proof within the next couple of days before paying cash for a luxury home.

Enjoy this Monday in all you do my friend.

John

Jun 18, 2012 02:50 AM #1
Rainmaker
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Ginny Gorman
Phillips Post Road Realty ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Tammie, this is a great post on contract contingencies which buyers need to understand but obviously some real estate agents need to know.  Both these other agents did not know their contracts to let their buyers miss out on good homes...great share!

Jun 18, 2012 03:34 AM #2
Rainmaker
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Rob Thomas
Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954 - Bristol, TN
Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro

Tammmie,

Great info! You are the expert buyer's agent!!

Have a great day

Rob

Jun 18, 2012 03:49 AM #3
Rainmaker
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Michael Jacobs
Coldwell Banker Residential Brokerage - Pasadena, CA
PasadenaCA Real Estate Representation 818.516.4393

Good morning, Tammie -- knowing and fully understanding contingencies for buyers and sellers is a critical part of the transaction.  Your two examples really underscore and reinforce your point. 

Jun 18, 2012 04:24 AM #4
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Tammie White
Benchmark Realty, LLC (615) 495-0752 or www.TWRealtyGroup.net - Franklin, TN
Franklin TN, South of Nashville

John - That's an excellent example of a contingency that buyers don't often think of. You did a great job representing your client.

Ginny - It was unformate in these cases that the agents didn't understand the urgency of getting a home under contract.

Rob - Thanks for your continued support.

Michael - Sometimes agents get in the way of a sale.

Jun 18, 2012 08:56 AM #5
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Debbie Reynolds
Prudential PenFed Realty, "The Real Debbie Reynolds" Your Clarksville Real Estate Professional, 931-920-6730 - Clarksville, TN
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Tammie, I always make it a point to reiterate the contingencies that are written in the offer just so the buyer and seller fully understand. It works for me and they have fewer misunderstandings of what is happening.

Jun 18, 2012 03:37 PM #6
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Marie Graham
Owner, The Refreshed Home White Plains NY - White Plains, NY
Westchester County Interior Decorator, Home Stager

TAMMIE!  Speaking as a regular citizen (ie not a Realtor) I really enjoy how clearly and thoroughly you educate your buyers. I know they love you, and am pretty sure you keep the other Franklin agents on their toes :)

Jun 18, 2012 07:35 PM #7
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Tammie White
Benchmark Realty, LLC (615) 495-0752 or www.TWRealtyGroup.net - Franklin, TN
Franklin TN, South of Nashville

Debbie - No reason to counter back and forth for several days on issues already addressed in the offer.

Marie - I hope consumers feel the same way about the information I provide.

Jun 18, 2012 09:04 PM #8
Rainmaker
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Juli Vosmik
Dominion Real Estate Partners, LLC, Scottsdale, AZ - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Tammie, excellent post.  I just had to use the appraisal contingency to good use.  I had pulled comps for my buyers and felt the home was a "little" high.  The agent kept saying, "but the market is improving."  Yes, in an improving market, it's hard to get those higher prices because buyers who need financing need an appraisal which is reviewed by a mortgage underwriter - both of whom are under very strict scrutiny after the 2004-2006 real estate market and subsequent downfall.  They tend to be "conservative."  So, after the appraisal came back in a tad low, we renogotiated all thanks to the appraisal contingency in the contract.  Great job. 

Jun 19, 2012 07:05 PM #9
Rainmaker
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Wayne and Jean Marie Zuhl
Hallmark Realtors - Clark, NJ
The Last Names You'll Ever Need in Real Estate

Good morning Tammie - Great post with lots of information for home sellers and buyers!

Jun 20, 2012 04:38 AM #10
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Tammie White
Benchmark Realty, LLC (615) 495-0752 or www.TWRealtyGroup.net - Franklin, TN
Franklin TN, South of Nashville

Juli - I have also used that appraisal contingency to my buyer's advantage. It gives them the ability to re-negotiate the price if the appraisal comes in low. If it is higher than the agreed selling price, the buyer is thrilled because he has instant equity in his home.

Wayne & Jean - I hope consumers think so.

Jun 20, 2012 07:32 AM #11
Rainer
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Bas Panch
SCV Home Buyer - Valencia, CA

Hi Tammie,

Thanks for explaining this so clearly. It's so important for everyone involved to understand contingencies, and you were able to explain them well. Keep up being a top Franklin TN short sale agent, I wish you all the best!

Jun 20, 2012 06:59 PM #12
Rainmaker
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Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Very good information for home buyers and home sellers.  I suggested this for a feature.

Have an outstanding week.

Jun 25, 2012 07:08 AM #13
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Nestor & Katerina Gasset
International Properties and Investments LLC - Wellington, FL
Realtors, Wellington Florida Homes For Sale

Hello Tammie, I must admitt I always enjoy visiting your blog here because I learn helpful and useful information.You're definitely the right Franklin TN Short Sale Agent to contact.Best of luck to you! 

Jun 25, 2012 11:11 AM #14
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Tammie White
Benchmark Realty, LLC (615) 495-0752 or www.TWRealtyGroup.net - Franklin, TN
Franklin TN, South of Nashville

Bas - I really is important for both buyers and sellers to understand these types of things before going under contract.

Roy - Thanks for the vote of confidence.

Katerina - Thanks.

Jun 25, 2012 08:06 PM #15
Rainmaker
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Jane Peters
Power Brokers Int'l - Los Angeles, CA
Connecting you to the L.A. real estate scene

I can only imagine in this market a buyer insisting that a seller get an inspection to prove that the house doen't have a particular fault.  As you say, that's what the home inspection is for and the contingency period.  Oh well.  Poor buyer lost out.

Jun 26, 2012 01:39 PM #16
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Renée Burrows
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate - Las Vegas, NV
Las Vegas Real Estate Broker - www.urLVhome.com

Contingencies are such a beautiful thing.  Right now our inventory is so dire that sellers are requiring that buyers fulfil them in very little time or remove them immediately :yikes:

Jun 26, 2012 03:58 PM #17
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Tammie White
Benchmark Realty, LLC (615) 495-0752 or www.TWRealtyGroup.net - Franklin, TN
Franklin TN, South of Nashville

Jane - This was definitely a mistake by the agent.

Renee - I had the same thing happen recently. My seller had multiple offers and one of those included a sale of home contingency. This particular buyer offered the best price so the seller asked that all the contingencies be removed two weeks prior to closing and the buyer did. We close on Friday.

Jun 26, 2012 04:54 PM #18
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