Right now, it’s a tough market for buyers. According to Realtor.com, the national inventory of active listings is down 43.1% this year! This scarce selection has buyers going to greater lengths to make their offer stand out.
They’re making high offers, writing heartfelt letters, and even removing contingencies. A contingency is a condition that must be met to finalize the sale of a home. This, basically, offers an escape hatch if problems arise with the home or home buying process.
Read more to learn which contingencies could lead to an even bigger headache if removed.
Home inspections
In a home inspection, an expert assesses the home for roofing, plumbing, structural, electrical, and other major problems. Waving this entirely is the equivalent of agreeing to buy a ticking time bomb.
If problems arise during an inspection, you can request repairs to be made. Home inspections give you the opportunity to assess what repairs are needed and if it’s worth it to cover them. If not, a lower price could, potentially, be negotiated.
Well water/septic system inspection
This contingency is overlooked but doesn’t lack importance. This is the water you’ll be drinking and bathing in. Depending on the condition of the system, this could, possibly, lead to health consequences.
This is an issue that can be very expensive and not easy to fix. We’re talking thousands of dollars.
Appraisal
Waiving appraisals is becoming more common because of how crazy the market is. In most cases, it’s not the smartest thing to do.
An appraisal waiver commits the buyer to pay the agreed-upon price. If an appraisal comes back less than the agreed-upon price, the mortgage lender won’t always agree to lend the buyer the balance. Buying a home at a price above the appraised value basically ensures that the buyer might not recoup their investment.
Financing
Financing is one of the most misunderstood contingencies in Real Estate. This is an important tool to help buyers negotiate.
A financing clause ensures that your offer is dependent on being able to secure financing. If you remove it, you may not get your deposit back if you cannot obtain a loan. So, If you’re like most buyers and are relying on a mortgage to purchase a home, you should never remove this contingency.
When buying a house, take a moment to look at all aspects of the transaction. Decide what is right for you and take control of your home buying process.
