According to the Oxford Dictionary, a contingency is, "A future event or circumstance which is possible but cannot be predicted with certainty." A home can be one of the largest purchases in your life and sometimes you need one event to happen, or not want an event to happen, before purchasing something so major.
The market in the Denver area right now is tough for buyers so sometimes there are NO contingencies in an offer, but most offers have at least a few. At least a contingency on an inspection and appraisal are very common but there are others you may want to consider as well.
Some Contingencies in Offers
1. Home Inspection Contingency. This is the most common contingency in home purchases. Even new homes often have inspections. The cost of an inspection usually is based upon the size of the home and costs between $350 and $500. Buyers want to be sure there are not major problems with the home, but remember that inspectors are paid to find everything that is wrong with the home from bulbs that are out to foundation problems. That does not necessarily mean if there are 45 things listed that the house is "bad" or you should not buy it. They may simply be minor issues and sometimes the seller will be willing to fix items or give the buyer some money so the buyers can fix it themselves.
2. Septic Inspection. Contingency Obviously not all home have a septic system. In fact, most homes are on the public sewer system, but if the home you are considering buying is on a septic system, you probably want to have it inspected. Some locations, including many counties in Colorado, actually require an inspection as part of obtaining a "Use Permit" when a home is sold. Septic Drain Fields, often called Leach Fields, usually last 15-20 years and when it does "fail," it may cost a bundle to fix. If the public sewer at that time is within a certain distance, sometimes the home owner is not allowed a permit to replace the field but must pay to have the system piped into the public sewer system. Don't be afraid of a septic system, but a good idea, if not actually required, to have an inspection.
3. Home Sell Contingency. It is great when you find that home you really want. Most people, however, will need to sell their current home in order to have enough money and credit to buy another home. A Home Sell Contingency states that the buyer's current home will be under contract and/or close within a certain number of days of the offer or the contract may be cancelled. Often times the buyer's sell of the current home and the purchase of the new home happen on the same day or within a day or two of each other.
4. HOA Contingency. HOAs often have many rules and regulations when it comes to homes. This contingency obviously only applies if there is an HOA. Even if an HOA has voluntary dues, the rules and regulations of the HOA will usually still apply. Many HOAs in Colorado will allow horses and dogs, but not chickens even if the homes are on acreage. If you want chickens and they are not allowed by the HOA, you can cancel the contract by following the proper steps.
I am a real estate broker, attorney and mediator. I am blogging from my own ideas and perspective. Although I am a licensed attorney, these are not intended to be legal advise.