Risks of Removing Buyer’s Contingencies

Typical real estate offers include a wide variety of standard contingencies. These can include home inspections, appraisal, and loan approval. In a fast-moving, seller’s market, one of the ways to make an offer more appealing is to remove contingencies.

Real estate contingencies are intended to protect the buyer from unforeseen issues. Once these contingencies are removed, the buyer typically has no recourse from these issues. The most important contingencies include:

• Home Inspections – including mold, well/septic, structural, geological
• Lending Approvals – including appraisal, title, loan rate and terms, final loan approval
• Property Condition – this relates to the final walk-through, ensuring the property has been maintained during the escrow period

Any, or all of these items can create problems during, and even after, the closing period. Without the contingencies in place, the buyer is obligated to conclude the sale and any financial costs incurred by the seller for not doing so, including the forfeiture of their deposit.
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Most of the United States is experiencing an advancing market. This means prices are rising at a steady pace. As a result, both buyers and sellers expect to settle on a sales price higher than recent, comparable sales. Buyers are desperate to have offers accepted and are willing to compromise on contingencies designed to protect them. Ensure you thoroughly review all contingencies or the waiver of them with your agent prior to making an offer. Along with your agent it is important to speak with your loan officer and understand the loan risks involved and how removing contingencies could affect you from getting your loan approved.

Hunting for a New Home? Don’t Wait Until Saturday! 
 
House hunting has become a contact sport over the past year. The idealized vision of a leisurely Saturday morning reviewing open houses and plotting the day’s tours over lattes and croissants is a thing of the past. While popping into the local open house might be fun for the casual looker, if you are serious about finding your next home, this climate demands strategy.

First and most importantly, know exactly what you need and want in a new home. Then share this vision in detail with your agent. Identify not only what you need in the property, but which communities would best fit your lifestyle. With lower inventory from which to choose, you also need to be clear about any compromises you are willing to make—if any.
Once you know what you’re looking for, the next step is to clear some time during the week for house hunting. That’s right, mid-week.

In fact, for those searching for open houses, Thursdays are the best days to tour a community. Thursdays have always been the traditional days for agent open houses. This is when real estate professionals take time to tour new listings, but they are open for buyers also. This can allow serious buyers to view and write offers on new listings before the weekend crowds.
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Strategy is critical in a seller’s market. Serious buyers need to prioritize their search to position themselves ahead of their competition. Being available to see new listings as soon as possible is one way to ensure you don’t lose out on an opportunity to write an offer on the right home.