Should You Waive Contingencies to Win a Bidding War?
News of the nation’s low inventory of homes for sale is everywhere, as are reports of the return of a corresponding competitive buyer pool. But if multiple bids make the bidding process more competitive, what does that mean to buyers? We all know we can compete by offering more money, but how else can we sweeten the deal?
Contingencies: Think Long and Hard Before You Waive Your Protection
In some uber-tight markets, buyers might ask their agents to write offers that waive contingencies in order to outbid the competition. This move ostensibly sweetens an offer as it implies no barriers between offer and close of escrow. Both buyers and seller may think the “ease” of such a transaction makes this offer stand out favorably among competitors. But for buyers, agreeing to a sale without a home inspection (the most common and important contingency of all) can be an incredibly expensive mistake.
As a first-time buyer myself, I’ve been there, so I understand the pressure: You found a house you love the look of, and a lot of other people love it too. You want it. You’ll do whatever it takes to have it. But slow down. What if that adorable peaked roof leaks? What if the foundation your pretty home sits on isn’t stable? You will end up spending twice, three times (or more!) what you expected making repairs on an house that isn’t sound. And that’s not money you’ll be able to borrow from a bank, understand. You’ll most likely have to find the money for repairs from your savings, savings you likely had planned for other purposes—if you even have that savings at all.
Accepting Recent Inspections in Place of Your Own
Inspection as Protection
Inspection contingencies protect the buyers from finding out later that their homes aren’t safe and sound. In a well-written offer, the inspection period allows you the chance to walk away from the home if you find an issue too expensive or too complicated for you to handle. This is particularly important to new buyers who don’t really know what home repairs entail yet. If a deal-breaking issue arises, buyers can indeed break the deal without losing earnest money in the process.
No, the home inspection fee can’t be recouped; but which costs more: finding out a roof needs repair or repairing a roof?
If you really feel like the market you’re buying in has become ridiculously competitive, you may still be tempted to waive contingencies in your offer. If this happens, consider then making the inspection before making the offer. Again, you’re out the inspection fee, but at least you gain the peace of mind you need to make the offer now without an inspection period written into the contract.
Ask Your Realtor®
Your real estate agent knows the market you’re in, and unlike you, isn’t emotionally connected (in some cases, we all know, emotions compete with logic). So talk to your agent about how to make an offer more competitive in a way that wins you a house, but doesn’t lose you the protection you have a right to.