When you make an offer on the house and the seller accepts it, you and the seller must sign a contract stating your intention to purchase should all contingencies be met.
Contingencies are factors that can cause the temporary deal to fall through, releasing both the buyer and the seller from the contract without penalty. Contingencies typically involve:
- Home inspections
- Home sales (if the buyer is also selling their current home)
- Title ownership
Being under contract is the most active step in the homebuying process. This is the time to complete acts of due diligence to ensure the home is both functional and valuable.
The due diligence period is your opportunity to inspect the home, ensuring everything is functioning properly. It is also the time to uncover anything disastrous about the house before the sale is finalized. During due diligence, buyers must order a home inspection and an appraisal.
Schedule your home inspection with a third-party inspector as soon as you can. The earlier a contract-breaking problem is detected, the sooner you can remove yourself from the deal.
Your inspector will complete a thorough inspection, identifying even minor issues so you’ll be aware. The main features they investigate are the:
- HVAC System
- Plumbing System
- Electrical System
Depending on what your inspector finds, you can request that the seller covers any of the issues found. The seller has the right to agree to the repairs, agree to partial repairs, or deny your request altogether. No matter how they respond, you have the option to continue with the contract or pull out of the deal.
After the inspection comes the appraisal. This is your chance to find out if the home has value within the housing market. Appraisers determine this by evaluating aspects of the house, including:
- Home structure and the structure of any additional features (garages, sheds, mother-in-law-suites, etc.)
- Quality of building materials
- Quality of the house’s features (roof, windows, foundation, attic, basement, etc.)
- Upgrades and renovations
- Property size and condition
- Property features
- Neighboring homes
- Neighborhood location
The results of your appraisal will provide clarity as you choose to pursue the purchase or put an end to it.
Also, keep in mind that the appraisal could affect your preapproval status if it’s too low. Lenders do not want to take chances on a home with little value, so a low appraisal could possibly jeopardize the amount you’re able to borrow.
Rely on Our Real Estate Lawyers to Assist You While Under Contract
The period of due diligence can be tricky. To ensure you’re getting the most out of your contract period, turn to the team at Walker, Hulbert, Gray, & Moore. Our attorneys understand the process and can help you identify any harmful discrepancies that may be present in your contract: 478-987-1415
Stay tuned for the rest of our series on the steps to buying a home:
- Steps to Buying a Home, Part 1: From Preapproval to Offers
- Steps to Buying a Home, Part 2: Three Offer Responses
- Steps to Buying a Home, Part 3: What to Do Under Contract
- Steps to Buying a Home, Part 4: The Under Contract Phase, Continued
- What to Expect on Home Closing Day