Homebuyers’ New Safety Net
By: James Flippin · April 13, 2023 · Reading Time: 2 minutes
What’s an Employment Contingency?
In the last quarter, 53% of real estate agents reported an increase in buyers implementing an “employment contingency” in their contract. This is a protective clause that allows homebuyers to back out of a deal with minimal penalties if they lose their job prior to closing.
Employment contingencies have become particularly popular for finance and tech workers.
Incorporating a Safety Net
Various contingency clauses exist in real estate and allow either the buyer or the seller to back out of a deal if certain conditions are not met. In recent months, employment contingencies have notably gained traction amongst buyers. These clauses act as a safety net for homebuyers who may want to back out if they lose their job before closing the deal. This clause typically allows the potential buyer to get back any deposits they’ve put down and avoid any penalties.
Factors including general economic uncertainty and the recent wave of tech layoffs are contributing to added interest in the option as a safety net for homebuyers.
What To Know
Employment contingencies aren’t just reserved for people making a quarter million per year. Anyone buying a home or property can include one.
Including an employment contingency may weaken your offer, especially in a competitive housing market. But, with mortgage rates sitting at 6.3%, homebuying demand is diminished in many regions. These conditions are giving buyers more confidence to ask for contingencies.
So, if you’re looking to buy a home even in this tough market, don’t be afraid to prioritize security. After all, any good property has at least a few escape routes.
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