Brought to you by Scott P. Rogers, Funkhouser Real Estate Group, 540-578-0102, scott@HarrisonburgHousingToday.com
Brought to you by Scott P. Rogers, Funkhouser Real Estate Group, 540-578-0102, scott@HarrisonburgHousingToday.com
Monday, April 19, 2021
It's a crazy market right now. There are definitely many more buyers than sellers in most segments of our local housing market. As such, buyers are having to make difficult decisions about what contingencies to include in their offers.
The two prime examples are the INSPECTION and APPRAISAL contingencies.
INSPECTION...
- Most buyers want to conduct a home inspection as a part of the purchase process to make sure they are not buying a house with major issues.
- When there are many offers on a new listing there is often at least one buyer who is willing to waive the inspection contingency.
- Thus, many buyers are left wondering if they need to go ahead and waive their inspection contingency even if that is definitely NOT what they want to do.
APPRAISAL...
- Most buyers want to have the ability to renegotiate the purchase price if the appraised value comes back as being lower than the contract price. Without an appraisal contingency, and thus without the ability to renegotiate the contract price, they can be in a tough spot of coming up with more cash to make the home purchase work.
- When there are many offers on a new listing there is often at least one buyer who is willing to waive the appraisal contingency.
- Thus, many buyers are left wondering if they need to go ahead and waive their appraisal contingency even if that is definitely NOT what they want to do.
But maybe there can be a gray area between having and not having these contingencies in your offer?
INSPECTION...
Perhaps your offer could be contingent on a home inspection, but...
- you remove the option of terminating the contract without having given the seller the opportunity to respond to a repairs request
- you agree to only request repairs if there are any needed repairs that are expected to cost more than $2,500 to remedy, or if all needed repairs are expected to cost more than $5,000 to remedy
APPRAISAL...
Perhaps your offer of $300K could be contingent on an appraisal, but...
- so long as the appraisal is equal to or above $290K, you agree to proceed to settlement despite the lower appraised value
- if the appraised value is lower than $290K you reserve the right to propose a new contract price or terminate the contract
These are some basic examples of how to aim for that gray area between overtly contingent and not at all contingent. If you are buying in this market, have these conversations earlier than later to know what levels of contingencies you are comfortable having in your offer to buy any particular property.
