The uncertainty of the home buying process in New Jersey may create a bit of stress for people. A common goal of buyers and sellers is to protect their best interest and to walk away with as beneficial an outcome as possible.
Real estate contracts that address the interests of both parties will include contingency clauses. These bits of information clarify the obligation of each party and verify the required completion of various aspects of the sale to provide both buyer and seller with a desirable outcome.
Contingency types
Contingencies may affect several variables during a home sale, but according to Forbes, some of the more common types of contingencies include the following:
- Appraisal: An appraisal protects the buyer from paying an outrageous price above fair market value for a home. Often, mortgage companies require completion of an appraisal before approving a loan.
- Inspection: An inspection may reveal problems with a property prior to its sale so potential buyers have full disclosure of its condition.
- Title: A home title is a legal document providing a history of homeownership. Requiring this contingency proves beneficial for buyers with concerns about taking over ownership of a home without a clear understanding of who actually owns the property.
- Financing: Contingencies addressing financing may provide the buyer with ample opportunity to withdraw from the sale if they are unable to secure adequate financing.
Two-tier contingencies
Zillow suggests that while two-tier contingencies have declined in number, they are still beneficial in some circumstances. An example of a two-tier contingency is if a buyer currently owns a home which prevents him or her from having adequate financing to fund a new home. Thus, their ability to purchase a new home is contingent on their ability to sell their old home.
