These last few years, buyers and sellers have been working through contracts with pre-offer inspections and waived contingencies. Meaning, the buyers were assuming a lot of the risks in order to “win” the house. They didn’t always have to be the highest bidder because waived contingencies give sellers confidence that they would get to the closing table without any new negotiations or last-minute backouts.
For the most part, we are back to offers that offer list price but with contingencies back in play. Even the most well-prepped and well-marketed listing at a competitive price can still see competition.
Ok, here are the two most common contingencies that can alter the net take away to a seller and potential costs to a buyer.
Home Inspection Contingency - This is the most common contingency we see. On the surface, it's a two hour appointment with an inspector who points out both large and small flaws of the home. But buyers have the right to void the contract entirely if they feel the list is too large for them to take on. They can either negotiate for the sellers to take on the repairs or ask for a credit from the sellers to make the repair on their end. Sellers want to remember this contingency can alter their final net amount when negotiating the sales price.
Appraisal Contingency - This contingency has the potential for changing the agreed upon contract Sales Price. With two good agents on both sides, this contingency tends to come and go without any new price. What happens here is a third party appraiser comes out to evaluate the home. If the value comes in below the list price, the buyer has the option to negotiate the lowering of the sales price to the amount on the report. The seller can then accept, negotiate or decline that request. If no agreement is made during the allotted time frame, the buyer can walk away from the contract.
You see now why it was advantageous for buyers to waive these contingencies amongst last year’s unprecedented competition?
These contingencies have always been expected in a standard offer. Do not let them scare you because they are very manageable with good guidance. These contractual nuances are why “For Sale By Owner” homes have such a hard time selling. It’s not rocket science, but professional insight helps to determine what is considered acceptable vs asking too much.
And don’t forget! Our Fall Talk and Taste is October 13th at 6:30pm. A night of wine tasting with us and chatting about all your real estate market and home buying/selling questions. RSVP on our website at www.jilliankeckhogan.com/talx!
'Til next time,
Jillian
Have a question about real estate? Email Jillian!
Every month Jillian Keck Hogan shares local real estate insight, advice, and more. To learn more about Jillian and her team, visit jilliankeckhogan.com and follow her real estate group on Instagram @jkhogangroup_realtors. Equal Housing Opportunity.
