In recent years, buyers and sellers have worked through contracts with pre-bid inspections and waived contingencies. This means that the buyers were assuming a large part of the risk in order to “win” the house. They didn’t always have to be the highest bidder because the waived contingencies gave sellers confidence that they would get to the closing table without further negotiations or last-minute withdrawals.
For the most part, we’re back to offerings that offer list price but with back-in-game contingencies. Even the best curated and marketed list at a competitive price can still see competition.
Ok, here are the two most common contingencies that can change the net price to be taken out for a seller and the potential costs for a buyer.
Home Inspection Contingency – This is the most common eventuality we see. On the surface, it’s a two-hour appointment with an inspector who points out flaws, big and small, in the home. But buyers have the right to cancel the contract entirely if they feel the list is too long for them. They can either negotiate for sellers to pay for the repairs or request credit from sellers to do the repair on their end. Sellers want to remember that this eventuality can affect their final net amount when negotiating the selling price.
Valuation contingency – This eventuality has the potential to modify the agreed contractual selling price. With two good agents on both sides, this eventuality tends to come and go with no new price. What happens here is that a third-party appraiser comes in to appraise the house. If the value is lower than the list price, the buyer has the possibility of negotiating the reduction of the sale price to the amount indicated on the report. The seller can then accept, negotiate or refuse this request. If no agreement is reached within the time limit, the buyer can withdraw from the contract.
Now see why it was advantageous for buyers to forego these contingencies amidst the unprecedented competition of last year?
These contingencies have always been included in a standard offer. Don’t let them scare you off as they are very handy with good advice. 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 determine what is considered acceptable versus asking too much.
And do not forget ! Our Fall Talk and Taste will take place on October 13 at 6:30 p.m. An evening of wine tasting with us and discussion of all your questions about the real estate market and the purchase / sale of houses. RSVP on our website at www.jilliankeckhogan.com/talx!
Until next time,
Jillian
A question about real estate? Email Jillian!
Each month, Jillian Keck Hogan shares local real estate news, tips and more. To learn more about Jillian and her team, visit jilliankeckhogan.com and follow her real estate group on Instagram @jkhogangroup_realtors. Equal opportunity in housing.
Comments are closed.