A contingency is a condition of the contract that must be met or time expired in order to keep the contract binding. Some of the more common contingencies include financing, appraisal, inspections, and/or the sale or closing of a buyer’s current home. For a land sale, buyers may also require soil percolation, soil compaction, and/or well testing.
Unless otherwise specified in the contract, buyers are responsible for paying for the appraisal and all required testing. You should try to be flexible and accommodate for these appointments. You are not required to be present as in most cases the buyer’s agent and/or we will be present.
If the contract has a financing contingency, the property will also need to be appraised. Even if you recently had your home appraised, almost all lending institutions will require an appraisal ordered by their process. On commercial properties, a lender may also require additional testing prior to funding such as soil or environmental testing.
Most homebuyers will make their purchase contingent on a home inspection. This is usually done by a licensed inspector but not always. Sometimes buyers will have multiple inspections if they want an opinion on something specific such as HVAC, plumbing, termites, or a pool. Typically a home inspection contingency is to be completed within the first week or two after the contract is accepted.
If the buyer is not satisfied with the inspection or appraisal, they may request a renegotiation of the contract. If this happens, you really need to stay objective. If an inspector finds an issue, you are now legally required to disclose it to any future buyers. If the appraisal comes back low, we could try to argue the appraisal though it is rare for an appraiser change their figure. Also if the appraisal is initially lower than the offer, the buyer could still potentially walk.
Hopefully you will never find yourself in this situation, but if you do we will be there to offer you sound and practical advice to help you progress towards a closing.