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Sound Off: Some pros and cons of contingencies
March 17, 2017
Buyers are doing all sorts of things to acquire houses beyond writing the heartfelt “pick me” letter. In some cases, buyers will waive certain contingencies that are commonly included in an offer. There are various contingencies in a real estate contract, including inspections, title and financing/appraisal. Here in Marin, we are increasingly seeing more and more sellers provide the buyers with a complete buyers package, which typically consists of all inspections — the most common are home, pest, sewer lateral and drainage — as well as all required disclosures, plus the city resale report, the preliminary title report and the Natural Hazards report. If the buyer has received a complete buyers package upfront, and reviewed it thoroughly, then that may allow them to feel comfortable in writing an offer with few, or in some cases, no contingencies. The buyers’ agent can help assess the offer situation of a particular home. The buyer needs to understand the risks involved, and evaluate them against their own risk tolerance and desire to purchase that particular property. In the San Francisco/Bay Area market, having as few contingencies as possible will make an offer more appealing to a seller. Is the buyer paying cash or getting a loan? When representing a buyer, I run the comps up front so my client is reassured the appraisal will not be an issue. [...] there is no loan contingency. When representing a seller, I prepare an extensive disclosure package up front, including inspections, and if needed, bids for repair work. Successful buyers will go over the disclosures with their agent and presumably be able to either write a non-contingent offer or one with a very short review period of the disclosed items. In a multiple offer situation, if the non-contingent offer is not the high offer, then, with the seller’s permission, I make several calls.