Hello, home shoppers! We know that the current low inventory market can be challenging for potential buyers. Here at Jones Hollow Realty Group, we want to help you understand the complexities of real estate transactions so that you can make the best decisions in this competitive market. In this post, we’ll be discussing the top 5 contingencies used in real estate transactions and how they can impact your offers in a seller’s market. Remember, in situations with little inventory, buyers might need to waive certain contingencies to be more competitive.
- Home Inspection Contingency:
A home inspection contingency allows the buyer to have a professional home inspector evaluate the property’s condition. If issues are discovered during the inspection, the buyer can negotiate repairs, request a price reduction, or even back out of the deal. In a low inventory market, some buyers may waive this contingency to present a more attractive offer to the seller.
- Financing Contingency:
A financing contingency protects the buyer by ensuring that they can secure a mortgage loan to purchase the property. If the buyer cannot obtain financing, they can exit the contract without penalties. However, waiving this contingency can be risky for buyers who are not confident in their ability to secure a loan, as they may lose their earnest money deposit if they cannot complete the purchase.
- Appraisal Contingency:
An appraisal contingency is designed to ensure that the property’s appraised value meets or exceeds the agreed-upon purchase price. If the appraisal comes in lower than the purchase price, the buyer can renegotiate the price, seek additional financing, or cancel the contract. In a competitive market, buyers might waive this contingency to strengthen their offer, but they should be prepared to cover the difference between the appraised value and the purchase price if necessary.
- Sale of Current Home Contingency:
This contingency allows buyers to make their purchase contingent on the successful sale of their current home. This provides the buyer with the time and financial security needed to sell their existing property before committing to the new one. However, in a seller’s market, this contingency can be a deal-breaker for sellers who are looking for a quick and hassle-free sale. Buyers may need to waive this contingency to be more competitive in a low inventory market.
- Title Contingency:
A title contingency ensures that the property’s title is clear of any liens, claims, or other issues that could affect the buyer’s ownership rights. Buyers should be cautious about waiving this contingency, as a clouded title can lead to legal disputes and potential financial loss.
In conclusion, in a low inventory market or seller’s market, buyers may need to waive some contingencies to be more competitive. However, it’s crucial to carefully weigh the potential risks before making such decisions. Consult with your trusted real estate agent and other professionals to ensure you’re making the best choices for your unique situation. At Jones Hollow Realty Group, we’re always here to help you navigate the complexities of the real estate market. Happy house hunting!