Hi, I’m Warren Oberholser. I’m a realtor in the East Bay Tri-Valley area in Northern California. My goal is to help both buyers and sellers get maximum results for one of their biggest investments, their home.
This BLOG is all about contracts and contract obligations.
Now I need to point out that I am not an attorney, so any specific legal questions you have about the purchase agreement I highly recommend you consult with an attorney, especially one who practices or specializes in real estate law.
So for questions like I have buyer’s remorse, or I found another house that I like better, this is something you need to discuss with your real estate agent, who will most likely elevate the issue to their broker and or broker’s attorney for proper guidance. Again, I’m not an attorney, so it is best you be advised by one so you can move forward accordingly.
I also want to point out that I’m in the State of California. Each state and county will have its own laws and rules for real estate. However, there are conditions built right into the purchase agreement that will allow you to get out of the contract, and in most cases will allow a full return on your earnest money deposit. These conditions are called contingencies.
The dictionary defines a contingency as a provision for an unseen event or circumstance.
We like to think of this as an “if”. For example, I’ll consummate the purchase of your home if ‘Y’ occurs. Why is it contingency? It can stand for the success of your loan application, the sale of your current home, a satisfactory home inspection, and the home appraisal.
There are lots of different contingencies in a purchase contract. For this BLOG I’m just going to refer to the main three buyer contingencies.
The Three Common Buyer Contingencies
In a California residential purchase agreement, there are three basic buyer contingencies; investigation, appraisal, and loan.
The investigation period covers all inspections, seller disclosures, and any specific information to the properties such as the HOA documents. The appraisal and loan period is for your financed offer.
- The standard time for investigation and appraisal is 17 days
- For a loan, it’s 21 days
The basic purpose or function of the buyer’s contingency is a clause in the purchase agreement to safeguard the buyer’s deposit. So for example, if there’s something found in the inspection, the buyer can request the seller to correct it. If there’s an issue with the appraisal, let’s say value comes in for less than what the loan amount is, then the buyer can request another appraisal or possibly renegotiate with the seller on the purchase price. For loan contingency, if the buyer can’t qualify for a particular loan, they then can reapply for a different type of loan. This is providing they still have contingencies in place or the contingencies haven’t been released.
Now if the time period’s expired, the buyer can request from the seller an extension on time. If the seller will not allow an extension, the buyer will have to decide if they’re comfortable releasing that contingency and moving forward with the purchase of the home, or they can cancel the contract and escrow will refund the buyer’s full deposit. This is providing they still have a contingency in place or they haven’t released all the buyer contingencies.
Again, this is a basic overview of buyer contingencies. To have a better understanding you should have a thorough discussion with your realtor, loan agent, and if necessary an attorney. I hope this helps you better understand the California purchase agreement and the purchase of your new home is successful and closes on time.
I hope you enjoyed this article. Please let me know if you have any questions. Warren
Hello…I work with both buyers and sellers in the Tri-Valley area of Northern California. The Tri-Valley is comprised of 6 cities: Pleasanton, Livermore, Dublin, San Ramon, Danville, and Alamo. To better understand what each city has to offer, I have created a Pros and Cons video and BLOG for each – (Pros & Cons for Pleasanton, Pros & Cons for Livermore, Pros & Cons for Dublin, Pros & Cons for San Ramon, Pros & Cons for Danville and Pros & Cons for Alamo). If you are thinking about purchasing or selling a home, please reach out to me by text, phone, or email. If it is convenient, I can schedule a Zoom chat so we can discuss your home goals. Wishing you all the best on your home journey. Cheers!
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