HOME BUYING GUIDE: CONTINGENCIES

Escrow contingencies are safeguard periods in real estate contracts allowing buyers to perform tasks like inspections and securing loans. These are essential for protecting buyers but must be managed carefully within defined timeframes. In Sacramento, these periods are standard and require strategic handling to balance the protection they offer with market competitiveness.

Understanding these can prevent surprises and ensure a smooth home-buying process, while unwise waiving might increase risks. Always consider professional advice before waiving any contingencies.

• 🔍 Disclosure Contingency ensures sellers disclose important property facts to the buyer.
• 🔧 Inspection Contingency allows for property inspections and negotiations for repairs.
• 🏦 Appraisal Contingency protects if the appraised value is lower than the purchase price.
• 💵 Financing Contingency is essential if buyers can't secure financing.
• 🏠 Home Sale Contingency depends on the buyer selling their current home.
• 🛡️ Insurance Contingency ensures affordable homeowner’s insurance is obtainable.
• 📜 Title Contingency requires a clear property title before closing the purchase.

Let's take a closer look at some common types of real estate contingencies that Sacramento buyers might encounter:

• 🔍 Disclosure Contingency: Requires the seller to disclose material facts about the property, giving buyers a chance to evaluate these before committing fully.
• 🔧 Inspection Contingency: Allows buyers to conduct a professional inspection of the home and request repairs or negotiate based on the findings.
• 🏦 Appraisal Contingency: Protects buyers if the home's appraised value is less than the agreed purchase price; crucial when obtaining loans.
• 💵 Financing Contingency: Provides an out if buyers can't secure the necessary financing, often required by lenders.
• 🏠 Home Sale Contingency: Allows buyers to cancel if they are unable to sell their current home to finance the new purchase.
• 🛡️ Insurance Contingency: Ensures buyers can acquire affordable homeowners insurance for the property.
• 📜 Title Contingency: Requires the title to be clear of any liens or legal encumbrances before closure.

These contingencies are more than just wish lists; they're essential shields, ensuring you don’t end up buying a house that's a 'money pit' and a fix-it-up nightmare. Balancing these contingencies with market competitiveness is key to a successful purchase.

The Sacramento housing market typically follows standardized contingency periods under California law. Common timelines include:

• 📅 17 days for inspections and appraisals.
• 📅 21 days for loan approval.
• 📅 Length of escrow typically spans about 30 days for financed purchases.

These timelines reflect the pace of the housing market while providing buyers with time to ensure all conditions of the contract are met. However, flexibility can be negotiated based on specific market conditions or buyer/seller preferences.

So, you've lined up your contingencies and are ready to proceed. What's next? Buyers must actively remove contingencies with formal written notice within the specified timeframes. If buyers fail to do so, sellers can issue a "Notice to Perform", which gives buyers a short period—usually 48-72 hours—to remove the contingencies or face contract cancellation.

This step ensures both parties are on the same page and protects the interests of all involved. It's wise to strategize the timing of these removals to ensure you have all the necessary information to make informed decisions, potentially consulting with real estate professionals along the way.

In competitive markets, such as Sacramento's, buyers might consider waiving some or all contingencies to sweeten their offers. While this can make your bid more attractive, proceed with caution. Waiving valuable protections like inspections or financing could put you at substantial risk if unforeseen issues with the house or your financing arise.

Ultimately, deciding whether to waive contingencies should involve discussions with a knowledgeable real estate professional who can assess the market conditions and help weigh the benefits against the risks.