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The Home Buying Process Series: Contingency Periods

This is a new series we’re implementing that will discuss the steps in the home buying process.

Many first time home buyers don’t always understand why there is an escrow period between the time their offer on a home that was purchased was accepted, and when they can finally obtain the keys.

The escrow process is in place to insure that all contingencies and requirements laid out in the purchase contract are met by both the buyer and the seller.

Well, what are contingencies anyway?

Contingencies basically mean that there are items in the purchase contract that are contingent on being completed within a certain time frame prior to closing escrow. Now, these contingencies may vary depending upon the agreement reached by both the buyer and the seller in the purchase contract, but unless otherwise specified and agreed upon in writing, contingencies per the purchase contract are to be met within 17 days (In the state of California).

So what are these contingencies?

Contingencies include the right for the buyer to have the home they are purchasing inspected by a professional home inspector, as well as having an appraisal performed on the home to determine the property’s real value (Note: Appraisals are not required for cash buyers, however it is strongly recommended to have an appraisal performed anyway), and also to obtain loan approval.

California law states that at any time within these 17 days the buyer has the right to cancel the purchase agreement for any reason. AFTER 17 days however, the buyer may be held liable for penalties for not meeting the contingency requirements.

Contingencies in the purchase contract are critical to insuring that both the buyer and the seller have thoroughly met the conditions of the purchase as laid out in the agreement. They also provide accountability to all parties involved, including your real estate agent.

For more information about the buying process, go to http://bringingyouhomescv.com or call us direct at 661-290-3802.

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