Buying a home is one of the most significant purchases people will make throughout their lives. With hundreds of thousands of dollars on the line and a person’s living situation and lifestyle, buyers and sellers should carefully consider how they can protect themselves throughout this complicated transaction.

Certain conditions can significantly influence whether a deal proceeds smoothly or falls apart. Here are some key conditions that can make or break a real estate transaction. The conditions attached to a real estate transaction play a pivotal role in determining its success or failure.

Common conditions in a purchase agreement

There are several conditions you may see or consider before finalizing a sale. Some common conditions include:

• Financing contingencies ensure that the buyer can secure the necessary mortgage to purchase the property. This condition is critical because, without financing, most buyers cannot complete the purchase.

• Home inspection contingencies protect the buyer by allowing them to assess the property’s condition. An inspection can reveal hidden issues that could be costly to repair.

• Sale of existing home contingency allows the buyer to condition their purchase on the sale of their current home. It provides financial flexibility but introduces an additional dependency.

• Title contingencies protect the buyer by ensuring there are no legal claims or liens against the property. A clear title is essential for a smooth transfer of ownership.

• Legal approval, giving one or both parties time to consult with a lawyer

The conditions you may or may not include in your purchase agreement depend on many factors, from whether you are buying or selling the home to how quickly you want to complete the transaction.

Using Contingencies wisely

Contingencies can protect both parties. They can allow buyers to back out of a deal if the property is inadequate or problematic; they can protect sellers by allowing them to keep a deposit or take legal action against a buyer who backs out of an offer.

However, conditions are not always valuable in all agreements. For instance, if you are a buyer in a highly competitive market who wants to make your offer as attractive as possible, you might consider waiving conditions to fast-track the process.

The conditions you include or exclude in an offer can be almost as important as the price. Waiving certain conditions could be attractive to sellers but leave buyers with some unpleasant surprises while having too many conditions could provide more protection but result in a lengthier process.

As such, it is crucial to discuss conditions and other details of a purchase agreement with a lawyer. Additionally, both buyers and sellers should work closely with their real estate agents and legal advisors to understand these conditions, address potential issues proactively, and ensure a smooth and successful transaction. By thoroughly considering and managing these contingencies, parties can mitigate risks and increase the likelihood of a favorable outcome in their real estate dealings.