What Are Common Contingencies in NYC Real Estate Purchase Contracts? - YouTube

What are standard home-buying contingencies in New York City?

This is one of the most commonly asked questions by new home buyers which will aim to demystify

in the following video.

I'm Chris with Hauseit.

In case you're not familiar with the platform Hauseit is the largest for sale by owner and

buyer closing credit company helping home buyers and sellers save money on broker commissions

in New York City since 2014.

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move on.

The most common contingency that you'll find in New York City is the financing contingency.

Now this is a rather blanket term as it encompasses many potential other contract contingencies

such as minimum loan amount contingency.

However this is the most common one you will see precisely because many others that you'll

see in other states are not necessary.

For example a free and clear title contingency.

Now you might see some other states such as California.

However it's not necessary in New York because most contracts will already have standard

language saying that title should be delivered free and clear.

Now another contingency you might think of is the inspection contingency.

However this is not necessary in New York City because most inspections are done prior

to contract signing but after an offer is accepted. What typically happens is a buyer

will ask for a second or third showing after the offer is accepted and then bring a home

inspector with him or her.

Now the home inspector keep in mind will only be able to do a visual inspection.

Don't get confused about the home inspector potentially opening up walls and such and

inspecting pipes.

They will only be able to do what you can do with the visual inspection though perhaps

they may have a bit more experience and perhaps one other thing they can do additionally is

to secretly perhaps test for mold by pricking the walls.

Now this inspection is usually done after the accepted offer because if any issues

are found by the home inspector that you wish to bring up with the seller you can always

do so and perhaps asked to renegotiate for a repairs or a reduction in price.

Now this is actually quite a common tactic by home buyers employed in the city one of

the primary reasons being the seller may already be quite emotionally invested with your offer

they may have had additional days on the market become stop showing as frequently perhaps

and as a result the seller may be more amenable to negotiating.

What typically happens since most sellers are not home contractors or general contractors

themselves is they will usually agree to some reduction in the contract price in lieu of

repairs.

As a result because things are sorted out prior to contract signing an actual contingency

clause in the contract for an inspection is not necessary in New York.

This brings us back to the real contingency that you might see in New York City and that

again is the financing contingency. When it is submitted in an offer format it is rather

vague and a blanket term that undergoes further negotiation by the buyer and the sellers attorney.

Now just to quickly allude to two of the potential variants or additions to a financing contingency.

Let's start with the minimum loan amount contingency.

Now the minimum loan amount contingency allows you to exit the contract even if you get a

commitment letter but for an amount less than specified in the contract.

For example if the minimum loan amount specified and negotiated by your lawyer in the contract

is $2 million but you only were able to get a commitment a letter and a loan for $1.8 million

and made best efforts to do so, well it lets you exit the contract or more potentially

allows you to renegotiate with the seller.

The other variant is the appraisal contingency. As you expected most buyers will assume that

the appraisal will come in at the contract price.

Of course this doesn't always happen in reality and if properly negotiated by your lawyer

well if the appraisal comes in lower than the contract price or whatever the price set

by the appraisal contingency is it allows you to exit the contract or renegotiate as

well. So there you have it hopefully you found this video helpful and now just a recap.

If you are a new home buyer and you submit an offer the most likely contingency that

you'll encounter, if you our financing is the financing contingency.

Other contingencies are quite rare.

There is one other one just to be aware of before we close is the sale contingency but

that you will rarely see primarily because sale contingency is used when a buyer needs

to sell his or her current home and to use the proceeds in order to buy the new home.

This obviously has many moving parts and allows many outs for the buyer if the buyer is not

able to find a another buyer for his or her current home so most sellers are quite hesitant

to accept this sale or Hubbert contingency.

So aside from that what you'll see is usually the financing contingency you won't see very

many other types at all and that really is it.

We hope you found this video helpful and if you did please remember to leave a comment,

hit like, subscribe.

Thank you so much for watching again this is Chris at Hauseit and we hope to hear from

you!