Purchaser Protections in Real Estate Transactions

  • May 21 2018

Purchaser Protections in Real Estate Transactions

For most of us, our home will be the biggest purchase and investment that we will make in our lives.  The process of purchasing our home, therefore, can be an intimidating and anxiety riddled process.  The biggest and broadest advice is to make sure that you align yourselves with experienced professionals.  Many purchasers will be going through the process for their first time.  Some experienced home buyers may go through it a few more times than that.  However, experienced realtors, attorneys and loan officers will have thousands of transactions under their belts.  That experience is invaluable to a home purchaser and the ultimate reason you should assemble an experienced real estate team.

Protection 1: Attorney Approval Contingency

In most real estate transactions in the Capital District, real estate agents will negotiate and draft the terms of the Contract.  Then, this Contract is signed by you as the Purchaser.  Many clients of ours ask, “Can I sign the Contract before an attorney looks at it?”  The answer is, “yes” and it is because of the attorney approval contingency.  The attorney approval contingency is the first, and possibly the strongest purchaser protection in the transaction.  This protection allows a short period of time (usually a few days) for you and your attorney to review each aspect of the Contract to ensure the terms meet your understanding and needs of the transaction.  The contingency allows your attorney to add terms, delete terms, modify terms or cancel the Contract for any or no reason at all.  This protection is very powerful and provides the ability for you to begin the process with a rock solid foundation.

Protection 2: Inspections Contingency

Once your attorney approval process is complete, the next step most purchasers make is to have the home inspected.  The inspection contingency allows you to ensure that your new home is free of major structural defects, pest infestation, well water issues, septic system defects, elevated radon levels, and the presence of dangerous environmental conditions such as toxic mold, asbestos, vermiculite or buried oil tanks.   If any of the above conditions are discovered, you may cancel the Contract and most likely will be entitled to a full refund of any deposit monies placed down with the Contract.  Alternatively, as a purchaser, you may attempt to negotiate the purchase price or an alternate solution if cancellation is not your first choice.

Protection 3: Financing Contingency

The majority of us will need a little financial help to make our biggest investment.  Prior to searching for a home, you should add a mortgage professional to your team.  Your mortgage professional will pre-qualify you based on your credit and income so you know what you can afford and qualify for before you place your offer.  Once your offer is placed, your mortgage journey will begin.  If you are like most of us, if you cannot obtain your loan, you cannot buy your home.  The mortgage contingency provides a reasonable amount of time (generally around 30 days) for you as a purchaser, to ensure that your financing can be obtained.  This is a much deeper look into your finances and the specific transaction than in the pre-qualification step mentioned previously.  If for some reason it is determined that you cannot qualify for your financing, the mortgage contingency, if managed properly, will allow the Contract to be cancelled and for any deposit monies to be returned to you.

After your Contract has been negotiated, inspections successfully completed and your financing has been approved, it will be a short time until you are at the closing table waiting for keys to be placed into your hands.  The process is filled with challenges that are best met with an experienced team.  We at O’Connell and Aronowitz would love to be part of your team.  Please contact us online or call us at 518.462.5601.

Posted in: L.I.F.E. Group Blog, Residential Real Estate



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