How does this contingency work in a contract?

Question

Hi

This is all hypothetical... I'm just curious to know how this aspect of closing on a house works.

If I write in a 10 day inspection contingency in my contract does this give me the ability to back out of the contract for any reason?

For example, lets say I'm wholesaling a house. I have a contract with a seller but can't find a cash buyer (and I can't purchase the house myself) can I back out of the contract on day 9 to save my earnest money?

Aaron W. · Answer

@Carl Flint There really is not a list of justification. It really can be for any reason. However, if you have a 10 day inspection contingency and don't do an inspection, it may look a little strange but not out of the question. There are infinite reasons why someone backs out of the property. You really should go into a deal with the intention of successfully closing on it with the seller, whether it is you buying it, flipping it, or wholesaling it.

If someone backs out of too many deals for no real reason, then a reputation MAY form that they do not close and  brokers and sellers may start to disregard their offers.

Best of luck!

Aaron W. · Answer

@Carl Flint You are correct, with a 10 day inspection contingency, what that means is you have 10 days to complete your inspection and can back out of the deal with no repercussions. You don't have to provide a reason for backing out, but most of the time a reason will be provided.

Best of luck!

Carl Flint · Answer

@AJ H. makes perfect sense.

Carl Flint · Answer

@AJ H.

Okay, thank you. I wasn’t sure if the “reason” for backing out had to be directly related to the results of an inspection. Or if there was some sort of list of appropriate things that would justify your reason to back out. So, basically you can literally just change your mind and it would be covered in an “inspection” contingency?