If you’re looking to invest in real estate and you’re buying up more properties, you are making a lot of offers. Some of these may be rejected, leading to further negotiations, and some may be picked up immediately.
In many offers, real estate agents will advise adding contingency clauses. There are sellers who will be more likely to take offers without contingency clauses, which may make you think that it’s wise to leave them out. This can help you purchase more properties, but there’s also a risk. You need to consider why these contingencies are used.
Getting you out of your offer
The biggest thing about contingencies is that they can help you get out of a proposed contract or a purchase offer without causing any legal problems.
For instance, the most common contingency is one that revolves around a property inspection. You may have looked at the property and you may think that it looks like it’s in great condition to your eye, but you want to have a certified inspector come in to clarify if there are any issues. If the property doesn’t pass the inspection, or if the inspector finds serious issues that need to be rectified, then you want a contingency saying that you can walk away from the offer. You’re not still obligated to buy a property that you no longer want.
This is just one thing that you need to think about when you purchase real estate, so make sure you understand your legal obligations and the various options at your disposal.