Seller Step 7: Contracts and Contingencies

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Seller Step 7: Contracts and Contingencies

Understanding contracts and contingencies is key to a successful transaction as a seller. In this post, we’ll discuss the different types you may see, their uses and how they affect the contract, and some tips and tricks to help you along the way. So whether you’re a first-time seller or a seasoned pro, read on for everything you need to know about contracts and contingencies in Maryland real estate.

What are Contracts and Contingencies, and What are their Purposes?

Contracts and contingencies are binding legal documents that explain the expectations of both parties involved in a real estate transaction in Maryland. It’s important to understand when it is appropriate to use them, what clauses should be included, and when they take effect. It’s beneficial for sellers to know their rights under the terms written into each contract; however, as it’s essential to back up any agreement with legal language, consulting an experienced attorney is always recommended. Once both parties have agreed to the binding terms detailed in a well-written contract, they can move confidently forward in their real estate venture.

The Different Types of Contracts and Contingencies

Understanding contracts and contingencies is a critical part of any real estate transaction. For example, the Maryland Association of Realtors Contract of Sale is the most common contract you will see, which states key factors to the deal such as price and settlement. It is the main body of the entire offer, and any additional documents included are considered addenda. Contingencies provide additional safety nets for either the buyer or seller, in case the specific terms of the agreement are not met or maintained. Certain examples include appraisal contingencies, financing contingencies, inspection contingencies, and / or home owner association requirements.

These examples illustrate why it’s so important for buyers and sellers to have a thorough understanding of different types and examples of contingencies when negotiating and signing a Contract of Sale in Maryland. In certain instances, both buyers and sellers may choose to mutually agree upon a contingency to protect their interests – allowing either party to withdraw from a contract without penalty if a certain condition is not met or satisfied. Properly understanding the different types of contracts and contingencies can save both buyers and sellers time and money when it comes to their real estate investments.

Appraisal Contingencies

Appraisals let the buyers know they are not paying more than the property is worth. It is ordered by the mortgage lender if the buyers are financing the property, or the buyers can request a cash appraisal if they are paying cash. If the property appraises for less than the agreed price, both parties can either agree to lower the purchase price, the buyer can pay the difference in cash, or the contract can be broken.

Financing Contingencies

As a seller, you want to know that the buyer is capable of securing financing for the property. Financing contingencies allow the buyer time to have it approved, but also give you a deadline to know if they will or not. If financing does not go through, you will know before settlement and can put the property back on the market for a new offer.

Inspection Contingencies

Grants a buyer the right to conduct their own inspection of the property and potentially negotiate for repairs or price adjustments. The types of inspections are chosen by the buyer using a multitude of factors such as the location, the type and age of the property, and any additional features that may be a part of the home like a chimney or well.

Contract Requirements

When you’re selling a home, one of the most important components is getting familiar with the state contract requirements. Every counties and cities within Maryland demand its own regulations for things like disclosure of lead paint in a building and any applicable home owner association fees when signing that dotted line. It’s critical to ensure all forms are filled out properly and are up to date with current state laws and ordinances before signing a real estate contract. Do your research ahead of time so there’s no surprises—this can be done easily by an experienced lawyer or agent who can provide you with the latest tips and tricks to get through these contracts seamlessly!

How to Use Contracts and Contingencies to Your Advantage as a Seller

Contracts and contingencies are an important tool for any seller. Understanding their different types and uses is key to making the most of your sale. Knowing which clauses to include in each contract can make a big difference when it comes to getting the best deal for yourself. The good news is that there are some useful tips and tricks that sellers can employ to gain an advantage such as adding a seller-favorable contingency clause or including seller protection provisions. By taking advantage of these ideas, seller in Maryland can successfully navigate the contract process and maximize their profits on the next real estate sale.

More contingencies weakens the offer in a real estate sale

When signing a contract offer, giving the buyer multiple contingencies is giving them multiple ways to potentially break the contract. While it can offer the buyer some comfort and flexibility, it also weakens the offer by giving them more ways to back out of the deal.

When considering assigning contingencies to your potential buyers, stay focused on the most important ones. Most likely, they cannot avoid a financing contingency, and you really don’t want to either. But the amount of inspections they’re requesting, and how long that contingency period lasts can be changed to make it more favorable for you. Focus on giving your potential buyers important protections they need while still giving yourself an attractive and strong offer.

Should you use hand written, store-bought, or professional contract services?

When it comes to considering whether you should use hand-written paperwork, store-bought forms, or a professional service for your Maryland real estate contracts and contingencies, there are a lot of benefits and risks to consider. Whether done yourself or through the added cost of getting professional help, understanding the legal guidelines is key in whatever path you choose. If you choose to do it on your own, ensuring that all of your document requirements are satisfied can be challenging. Still, using reliable store bought paperwork is an option that many look to as an alternative; however this also can expose you to potential legal issues if the contract has loopholes. Working with an experienced professional can be invaluable in avoiding contractual surprises at closing time and therefore providing assurance that all steps comply with industry best practices.

Working with an experienced professional can be invaluable in avoiding contractual surprises at closing time and therefore providing assurance that all steps comply with industry best practices. Check out our partner brokerage for affordable and professional real estate services.

Contracts and Contingencies: Closing Thoughts

So there you have it! Everything you need to know about contracts and contingencies in Maryland real estate. With this information, you should be able to make informed decisions about whether or not to include certain clauses in your contract, and how to use them to your advantage. If you’re still feeling overwhelmed, don’t hesitate to reach out to a professional for help. After all, peace of mind is priceless – especially when buying or selling a home.

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