Finding a home that you want to purchase is exciting. As you walk through the home, you may admire the layout, architecture, or style of the home and begin to imagine living in that space. If you decide that it is the house you want to buy, you will need to make a formal offer to buy to the current owners of the property.
In your excitement, it is important to remember to protect yourself when you are in the real estate buying market. While it is desirable to present a strong and reasonable offer, it is a good idea to include some conditions in your formal offer to buy that allow you to get out of the purchase in specific circumstances without incurring negative consequences.
Some of the most common conditions in purchase offers include:
A low appraisal: There are many emotions involved when buying a home, but financial considerations are also important. If your home’s appraisal turns out to be significantly less than your purchase price, you may want to back down.
A negative home inspection result: There are many things that can go wrong with a home inspection and almost all inspection reports will recommend some kind of improvement that should be made to the property. That said, if the result of your home inspection shows a lot of problems, or a single very costly problem, you may want to back down from your offer to buy unless the seller agrees to remedy the problem.
Mortgage Denial: If your mortgage is not approved, you may not have sufficient funds to purchase the property and you may want to back out.
Discovery of title problems: Investigating your title may reveal that the property is subject to numerous easements or has liens that you do not want. It may also reveal an uncertain title string. In either case, you may decide to find another home to buy.
Not being able to sell your current home: Some buyers make the purchase offer conditional on the sale of their current home, so that they can have funds for the purchase of the new home and avoid having two mortgages at the same time. If your current home doesn’t sell by a certain date, you may want to give up on buying a new home.
When you have found the home you want to purchase, it is important that you make your offer to purchase with the conditions described above so that you truly get the home of your dreams. In order to take advantage of these conditions, they must be expressly included in your purchase offer and accepted by the seller. You can obtain and complete an offer to purchase document that is appropriate for your situation, or you can read more on Al Hartman for guidance.