Final answer:
In residential real estate sales, possible contingencies include inspection, financing, appraisal, and title contingencies. These conditions protect the interests of both parties involved in the transaction. Escrow, warranties, and service contracts also offer additional financial and property security.
Step-by-step explanation:
In a residential real estate sale, certain contingencies may be placed on the transaction to protect both the buyer and seller. These contingencies serve as conditions that must be satisfied before the sale can be completed. Here are four possible contingencies:
- Inspection contingency: This allows the buyer to have the property professionally inspected. If significant defects are found, the buyer can back out or negotiate repairs.
- Financing contingency: This ensures the buyer can secure a mortgage or loan for the purchase. If financing falls through, the buyer can exit the contract without penalty.
- Appraisal contingency: This is used to ensure that the property's value appraised by a professional meets or exceeds the agreed sale price. If the appraisal comes in lower, the buyer has room to renegotiate or withdraw.
- Title contingency: This confirms that the seller has a clear title to the property, free of liens or disputes. Any issues must be resolved before the sale proceeds.
In addition to these contingencies, buyers should also be aware of the concept of Escrow, which involves a third party handling certain payments such as home insurance and property taxes as part of the monthly payment. Moreover, buyers and sellers should remember that they both should be well-informed and act independently, ensuring a fair and competitive market. Warranties and service contracts can also be considered by the buyer, offering additional protection after purchase.