You’ve found the house of your dreams, but suddenly you wake up to reality: A bidding war is taking place, the price is going up and up, and once again your home purchasing plans go out the window. Blame it on the limited housing supply, the increase in demand, and the lower-than-low mortgage rates, all of which can factor into your housing offer being rejected. But ask yourself if something else could be at work here: Are the conditions you’re attaching to your offer knocking you out of contention?
Home purchase contingencies such as financing, home inspections, and closing dates can make the difference between a sale going through and an offer going nowhere. For example, if a seller receives two above-asking offers and only one of the two is stacked with contingencies, it wouldn’t be surprising if the offer without contingencies is the one accepted.
The following home buying contingencies could put you at a disadvantage when it comes to closing a deal — and leave you on the outside looking in at your dream home.
Skipping a financing contingency isn’t necessarily a bad idea, especially if your income is solid, you have enough assets to compensate for a potential mortgage shortfall, or you’re not overextending yourself to purchase the home. On the flip side of the coin, waiving a financing contingency can be risky business. If you submit an offer on a home and then have to walk away because you can’t secure financing, you’ll most likely lose your deposit and you might be sued by a seller. Adding a condition of financing, however, might not win you any points with the seller, who could see the contingency as an indication that you’re not in the best financial position to pay for the home.
Home Inspection Contingency
Home inspections can expose many things that might remain out of sight and out of mind until after the purchase papers are signed. No one wants to be surprised by a furnace that suddenly stops firing, a basement that floods, a roof that leaks relentlessly. But you don’t need to make an inspection a condition of the home sale.
In some instances, agents will pay to have a home inspection completed for their seller clients, and then make the results available to interested buyers. Another option: Some home inspectors will agree to perform “express inspections,” where they’ll accompany you while you tour the home and look for any significant problems.
Closing Date Contingency
Closing dates are a condition that simply can’t be avoided, but you can lessen its impact on the deal by adding in some flexibility. By allowing the seller to determine the closing date, you demonstrate a willingness to accommodate the seller’s terms, which might just give you a needed edge when it comes to finalizing a deal.
Understanding how contingencies work – and how you can make them work best for both you and the seller – can mean the difference between being given the keys to your new home or ultimately being shown the door.