There are three basic contingencies implemented within the escrow period: the home inspection contingency, the appraisal contingency, and the loan contingency removal.
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This contingency period normally lasts about 17 days. It can be shortened, though. We normally ask the buyer to reduce the timeline to 12 days because it doesn’t take that long to go through all the paperwork and do all the inspections.
The second contingency is the appraisal contingency. The lender plays a big role in this contingency. When they know that they’re doing a loan on a property, they hire a third-party appraiser to go out and do a valuation on the house to make sure that the offer the buyer wrote for it is actually worth that much money. This way, the bank can feel comfortable and confident when making their loan.
Sometimes, an appraiser appraises a home for lower than what the contract price is. At this point, more negotiations ensue. Let’s say, for example, that you got a contract at $400,000, but the appraiser appraises the home at $390,000. The buyer can pay cash to close the $10,000 difference, the seller can reduce the price from $400,000 to $390,000, or both sides can meet somewhere in the middle. If the home is priced correctly the first time, however, it should meet the appraisal price. The appraisal contingency lasts about 17 days as well.
The third contingency is the loan contingency removal. This just means that the lender has gotten all the documents they need from the buyer (bank statements, taxes, W-2s, etc.) and they are confident enough in them to release that loan contingency. Normally, this loan contingency happens 21 days after the acceptance of the contract.
These three contingencies exist to make sure the buyer is doing what they need to do to move the ball forward. As always, if there’s a problem, we solve it by negotiating.
If you have any questions or have a topic in mind you’d like to learn more about, please feel free to reach out to me. I’d be happy to help!
During a home sale, there are three basic contingencies implemented within the escrow period that you need to know about.
The first is the home inspection contingency. This contingency period allows the buyer to do all of their investigations (home inspection, roof inspection, pest inspection, etc.) as well as review all of the documents and disclosures that the seller has provided them, which they are required to do in California within seven days of accepting the contract. This also gives the buyer time to do their due diligence and feel comfortable that they’re getting the property they first wrote the offer for.
The first is the home inspection contingency. This contingency period allows the buyer to do all of their investigations (home inspection, roof inspection, pest inspection, etc.) as well as review all of the documents and disclosures that the seller has provided them, which they are required to do in California within seven days of accepting the contract. This also gives the buyer time to do their due diligence and feel comfortable that they’re getting the property they first wrote the offer for.
This contingency period normally lasts about 17 days. It can be shortened, though. We normally ask the buyer to reduce the timeline to 12 days because it doesn’t take that long to go through all the paperwork and do all the inspections.
The second contingency is the appraisal contingency. The lender plays a big role in this contingency. When they know that they’re doing a loan on a property, they hire a third-party appraiser to go out and do a valuation on the house to make sure that the offer the buyer wrote for it is actually worth that much money. This way, the bank can feel comfortable and confident when making their loan.
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These contingencies help move the transaction along.
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Sometimes, an appraiser appraises a home for lower than what the contract price is. At this point, more negotiations ensue. Let’s say, for example, that you got a contract at $400,000, but the appraiser appraises the home at $390,000. The buyer can pay cash to close the $10,000 difference, the seller can reduce the price from $400,000 to $390,000, or both sides can meet somewhere in the middle. If the home is priced correctly the first time, however, it should meet the appraisal price. The appraisal contingency lasts about 17 days as well.
The third contingency is the loan contingency removal. This just means that the lender has gotten all the documents they need from the buyer (bank statements, taxes, W-2s, etc.) and they are confident enough in them to release that loan contingency. Normally, this loan contingency happens 21 days after the acceptance of the contract.
These three contingencies exist to make sure the buyer is doing what they need to do to move the ball forward. As always, if there’s a problem, we solve it by negotiating.
If you have any questions or have a topic in mind you’d like to learn more about, please feel free to reach out to me. I’d be happy to help!
