finance contingency clause

A finance contingency clause seems to add risk for the seller. Do most contracts include this clause?

While a finance contingency clause does add risk for the seller, most buyers will not sign a contract to purchase a home without one. Buyers are willing to move forward with a purchase and pay their deposit into escrow as a sign of good faith. However, if they apply for a mortgage loan and cannot secure financing, they will expect their deposit to be returned. Sellers can protect themselves at the outset by requiring the buyer to prove his or her creditworthiness before signing a contract. Buyers can easily obtain a mortgage prequalification letter or preapproval letter to show that they are a good risk. This letter should provide the seller with some degree of comfort in going forward with the deal.

Joan A. Koffman, Esq., Real Estate Attorney, Koffman & Dreyer, Newton, MA