The Most Common Home Buying Real Estate Contingencies

Contingencies in Real Estate Explained

Do you know what a real estate contingency is and how it works? Real Estate contingencies are when some defined action or outcome must occur before a contract becomes legal and binding.

From a buyer’s perspective, a real estate contingency is an escape clause that can be used under defined circumstances. We will take an in-depth look at the most common real estate contingencies you need to understand when buying a home.

Many buyers and sellers are not well educated about the intricacy of some real estate contingency clauses. Given they are significant legal terms in a purchase and sale, it is essential to have a strong working knowledge of how they work.

Some of these clauses can benefit you when purchasing a home, so we will look at some of the contingency clauses you might encounter when buying a property.

If you are buying your first house, it will be especially beneficial to understand real estate contingencies.

Home Buying Contingencies
Home Buying Contingencies Explained

What Are The Most Common Real Estate Contingencies

These are some of the clauses that you may encounter when buying a house. The home buying contingencies below should be completely understood before signing on the dotted line of a purchase and sale agreement.

  1. Home inspection: often called a due diligence contingency, will give the buyer rights to have the house inspected. Most buyers will have a home inspection contingency in their contract. In extreme seller’s real estate markets, it is not uncommon for buyers to waive a home inspection as a way of sweetening their offer.
  2. Obtaining financing: allows the purchaser to get the funds to buy the property from a lender of their choice. Unless a buyer is paying cash, the mortgage contingency clause is almost always found in a purchase and sale agreement.
  3. Appraisal Contingency: You are waiting for a valuation and getting your loan from the bank. You need the real estate appraisal to be at a specified amount. An appraisal contingency will protect you by ensuring the property is valued at the minimum amount required by the borrower. Licensed real estate appraisers conduct appraisals that are hired by the lender.
  4. Association contingency – if there is a homeowners association, there will often be a clause stating the purchase is subject to the successful review of the association documents and financials. Buyers will want to make sure they are comfortable with all of the rules and that the HOA is financially stable.

These contingencies need to be met for a contract to become ratified and binding. While these contingencies are waiting to be performed, the property is considered a contingent house listing. It will be marked in the multiple listing as “contingent” until all the contingencies are satisfied.

When a condition or action is defined, it must be met for the contract to be binding. If these conditions are not met in a purchase contract, one of the parties may decide to terminate the agreement. The meaning of contingent has slight variation differences from state to state, so check with your real estate agent for clarification.

Real Estate Contingencies Explained

Once conditions are met, this makes the contract enforceable, and it is too late to back out without incurring legal consequences. This could involve losing part or all of your earnest money deposit. Many real estate contracts will have earnest money as the relief a seller can get for a buyer not proceeding with a contract.

  • An appraisal contingency protects the purchaser by ensuring the appraisal is at a specific figure for purchase to proceed. The purchase price of the home is usually the threshold that must be met.
  • A financing contingency gives the buyer time to raise funds for the purchase, and if they can’t raise funds, they can be released from the contract without penalty. The mortgage contingency clause will specify how much the buyer is borrowing and when they need to procure their financing.
  • Home sale contingency is put in place when the buyer has not yet sold their own home. Purchasing is contingent on making the sale first. If you are the homeowner awaiting purchase, you may want to put a time limit on this clause when signing the contract. You won’t want it to drag on for months and miss out on other buyers. Home sale contingencies are often frowned upon due to their risky nature.
  • The inspection contingency is contingent on a satisfactory house inspection report. The purchaser will need to be sure that there are no major expenditures required immediately, like a new roof. If a new roof was required, it might cause the buyer to terminate the contract or alternately to ask the seller to pay for it.
  • A homeowners association’s document contingency gives you the right to back out of the sale if you find something in the documentation that is not to your satisfaction. Quite often, it could be finding out that the neighborhood is not doing well from a financial standpoint.

Additional Contingencies in Real Estate Sales

What is a Kick-Out Clause

A buyer or seller can add the kick-out clause to protect against the house sale contingency. If a better offer comes along, a seller can move forward on a purchase agreement with a new buyer after giving the first buyer notice. The buyer with the kick-out clause in place will need to decide on moving forward in a specified amount of time. The time for a decision in a kick-out clause is usually 24-48 hours.

If the buyer does not exercise their right to move forward, the seller can move forward with a contract with buyer #2.

When working with a kick-out clause, it is not a bad idea to consult with a local attorney on crafting appropriate language. A kick-out clause is similar to the right of first refusal found in some real estate contracts.

Why You Should Pay Attention to Contingency Clauses

Real estate purchase and sale agreements are legal contracts. You must understand the details when buying and selling. Not only are huge amounts of money involved, but there is often an emotional investment as well.

Contingency clauses are there to protect you, whether you are buying or selling.

When you buy your house, the contract may say contingent on quite a few things. It is essential to work with an excellent buyer’s agent who will carefully craft appropriate contingencies to be inserted into the contract.

Whether it is a financing clause, home inspection, or some other contingency, it is crucial to stay on top of dates. You will need to make sure you follow all the designated contingency dates, so you stay within your deadlines.

By not providing notice by specified deadlines could leave you open to losing your deposits.

Contingencies Can Benefit Buyers and Sellers

You can make contingencies work for you whether you are selling or buying, as you want your transaction to run as smoothly as possible and complete in time.

So once you sell, there will be contingencies in place in the contract. A contingency is actually a condition that allows everything to move forward to completion. So it is useful when you are purchasing to have some specific contingencies in place to protect you.

Final Thoughts on Real Estate Contingencies

A contingency clearly states expectations and dates. Both buyers and sellers should have a clear understanding of all real estate contingencies meaning. Not understanding a real estate contingency could either cause problems in your transaction or, in a worst-case scenario, a loss of funds.

It is especially important for first-time home buyers to have a firm grasp of common home buying contingency clauses.

Hopefully, you now have a better understanding of common real estate contingencies when buying a home.

Source: realtybiznews.com

Veteran? Want to Buy a Home? Check out Veterans United Home Loans

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If you’re a veteran, and you’re looking to buy a home, a company called Veterans United Home Loans could help you buy one — no down payment needed.

Here’s why: Veterans United offers competitive, transparent rates. And it acts as a resource for military homebuyers and their families, offering 24/7 customer support over the phone.
Source: thepennyhoarder.com
That’s a lot of people. In fact, only four states have more people than that.

How You Could Buy a Home Without a Down Payment

You might be thinking this sounds complicated. But here’s the thing: Veterans United makes it easy. It handles all the hard parts for you, and its VA loan experts on staff know how to navigate the whole process quickly and easily. They know the benefits and processes inside and out, making sure you get every benefit you qualify for.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He’s not a veteran, but he is a homeowner.
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Also, Veterans United just makes it really simple to apply for a VA loan. You can use its website to see if you’re eligible, and it’s easy to apply for a free quote.

How to Get Started

Veterans United Home Loans is the single biggest lender for VA purchase loans in the country. It’s licensed in all 50 states, and in 2020 alone, it helped more than 86,000 service members, veterans and military families secure more than billion in VA loans. Veterans United has been the nation’s No. 1 VA purchase lender since 2016.
There are roughly 18 million U.S. military veterans. Together, they make up about a seventh of the country.

Ready to stop worrying about money?

The pandemic has caused a surge in demand for vacation homes

The COVID-19 pandemic appears to have inspired more people to look at buying a vacation home, according to a new analysis of mortgage data by the online real estate brokerage Redfin.

In its analysis, Redfin found that mortgage applications for second homes jumped by 84% in January, compared to one year ago. And in September 2020, they surged by 118% year over year.

Taylor Marr, an economist at Redfin, said that although demand is down slightly in January from its peak last fall, the fact that there were nearly twice as many applications for a second-home mortgage as there were in the year before means that this is no fad.

“Many Americans have realized remote work is here to stay, allowing some fortunate people to work from a lakefront cabin or ski condo indefinitely,” Marr said.

The annual rise in second-home applications is more than double the increase in applications for primary homes, according to Redfin’s analysis. That has led to a rapid increase in the prices of homes in vacation hotspots, with many towns and cities seeing double-digit yearly growth. The high prices are partly due to the limited inventory of homes for sale in those places, Redfin said.

Jaime Moore, a Redfin real estate pro in Las Vegas, said that the desire for vacation homes there is as strong as ever. The problem, she said, is that inventory is so low that fewer people are actually able to find a home that meets their needs and budget, submit an offer and then apply for a mortgage on it.

“The market is still highly competitive, and almost all the buyers are people from the San Francisco area purchasing their second home,” Moore said. “The only time I see a buyer looking to purchase a primary residence is when they already live here in a rental, and they’re looking for something more permanent.”

Source: realtybiznews.com

10 Wild Home Inspection Photos That’ll Make You Go ‘WTF?’

Instagram is an endless trove of eye candy in the form of celeb selfies, cute pets, and cool home design ideas—but who would have thought that shocking home inspection photos of rusty toilets or electrical hazards would become Insta-famous, too?

That’s the kind of fare you’ll find on the unlikely but addictive account @bostonhomeinspectors, which boasts 13,600 followers and counting. Home inspector James Brock started this account five years ago at the urging of his teenage daughter.

Every day, Brock posts a new photo from his home inspections as a warning to home buyers on what they might encounter—but also just for laughs.

“I look for the humor,” he says. “I really love when people share their own funny captions for my pictures in the comments.”

Brace yourself for the 10 most memorable scenarios Brock has ever encountered during a day’s work.

1. A too tiny closet

“You can’t call a room a bedroom in a listing if it doesn’t have a closet,” Brock explains, “which might explain how this crazy sliver of a closet came to be.”

2. A bathtub that could fall to the basement

“I was standing in the basement, looking up at the bottom of the bathtub a floor above,” Brock recalls.

What he saw there “is really dangerous,” he says. “Someone cut out the framing and joists underneath the tub. The weight of the tub, water, and a person in it could send this plummeting. The buyer negotiated money off the sale price to fix this.”

3. An ‘in-law door’

Brock nicknamed this second-story door—with no stairs—”an in-law door,” he jokes. “It’s obviously very dangerous. It looks as if there was once a deck, or someone intended to add one. This needs a very good lock, at least, to protect, say, a child who might live inside that house.”

4. World’s wonkiest staircase

“These stairs were built to go up to a roof deck,” Brock says. “They are structurally sound, but completely not to code—there’s only a rail on one side. Imagine someone coming down from the roof, a little drunk. Very dangerous. This needed an architect or engineer to rebuild it.”

5. A toilet in the kitchen

“This is wrong in so many ways—completely illegal in terms of the sanitary code,” Brock says.

So why would anyone put their commode in the kitchen?

Brock says the toilet was there first, and in an effort to turn this basement into its own apartment, “someone had just built a kitchen around it. This was listed as a two-family house.”

6. Shocking hookups

“I don’t know if it was the electrician or plumber who did this, but these are way too close together,” Brock says. “What went through the mind of the tradesmen who did this, I don’t know, but it’s an electrocution risk, and the buyers got a credit to repair it.”

7. Loose ladder

“I don’t know what was going on with this—was it a fire escape from the deck?—but it’s a death trap,” Brock says. “Too tall, not secure, not anchored. It’s got to go!”

8. Fuzzy filter

“This is the air filter that was installed when this house was built five years ago,” Brock explains.

The reason it looks so gunked up? “Air filters are supposed to be replaced twice a year. Look what the sellers have been breathing in,” he adds. “This needs a professional cleaning, and the buyers shouldn’t pay for it.”

9. A ridiculously tiny ‘deck’

“This house was listed as having a deck,” Brock says. “And the ledger board shows you where the deck used to be. It must have been rotten, so they built that little thing.”

10. A toilet too close to the door

“Obviously, someone replaced a smaller toilet with a new one that’s way too big,” Brock says. “You can either swap in a smaller model, or notch the door.”

Source: realtor.com

A Casa for Your Cryptocurrency? 11 Homes You Can Buy With Bitcoin

Bitcoin is back! Not that it ever really left, but these days, the cryptocurrency with the ballooning value has become a tad more mainstream.

Tesla recently announced that it will soon be accepting bitcoin as payment for its electric vehicles.

And there’s no better place to park your bitcoin-bought Tesla than in front of a home that you purchased with virtual currency.

With bitcoin on the brain, we spotted 11 listings across the country that declare they’re ready to accept cryptocurrency for full or partial payment.

Of course, you might be able to purchase any home for sale with the internet-based payment system. A buyer could always inquire whether a seller is hip to the cryptocurrency. However, in the case of the listings below, you can rest assured that a digital payment will be welcome.

As a refresher, Bitcoin is an online monetary system independent of governments or banks, meaning that transactions are more direct. Each payment is documented and verified through blockchain—an online, shared database.

The upside? Transactions are more direct and can be completed in minutes or days, rather than the traditional closing period of weeks or months. A downside? Capital gains tax can apply. And, of course, with the wild oscillations of the crypto market, the currency is still a risky bet.

But if you happen to have a few coins burning a hole in your (online) wallet, here’s a look at how you could spend them. (Spoiler alert: Hope you like Florida.)

To give a sense of how much online coin you’d be parting with, we included a dollar-to-bitcoin currency conversion, calculated on Feb. 11, 2021. Prices range from the affordable to the aspirational, from cute condos to a massive Manhattan mansion. Take a look.

Price: $3,695,000, or 78.72 bitcoin
Property perks: Located atop the luxurious Trump Royale tower, this two-story, 4,300 square-foot dwelling offers panoramic views of the ocean, downtown Miami, and the Intracoastal Waterway.

The combined two-unit abode includes top-of-the-line finishes by the designer Roberto Cavalli, a German-designed kitchen, a private, pneumatic glass elevator, and oceanside and cityside terraces.

Amenities for residents include beach and pool services, restaurants, a beachside bar, gym, and tennis courts. Meanwhile, a gated entry and 24-hour security allow for peace of mind.

Sunny Isles Beach, FL
Sunny Isles Beach, FL

realtor.com

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Price: $29.9 million, (or for digital currency equivalent to 1.5 times the offered price in U.S. dollars) 955.52 bitcoin
Property perks: Plunk down some serious coin for this majestic Beaux Arts abode. The tallest townhouse on the block, the residence from 1904 features 12,380 square feet of interior space, plus an additional 2,500 square feet of exterior space.

The spacious, 22-foot wide structure features 13-feet-high ceilings, seven bedrooms, and 9.5 bathrooms. A solid bronze marble entrance leads to a marble reception gallery and staircase connecting the space to the upper floors.

The townhome features 12 working fireplaces, and a separate penthouse on the fifth and sixth floors.

Manhattan townhouse
Manhattan townhouse

realtor.com

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Price: $2.8 million or 59 bitcoin
Property perks: Located on Nob Hill, the “sensationally” remodeled four-bedroom, loftlike residence features soaring 12-foot beamed and coffered ceilings.

Luxuriate in views of the San Francisco Bay and the downtown skyline, as well as wide-open entertaining and living spaces. The master bedroom boasts a view of the iconic Transamerica Pyramid.

A renovation five years ago reimagined the 1920s-era design and updated it for a contemporary lifestyle.

San Francisco, CA
San Francisco, CA

realtor.com

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Price: $1,488,000 or 31.36 bitcoin
Property perks: The property brought in a whopping $160,000 worth of rental income in 2020. The listing details note that the home offers an ideal vacation escape and plenty of rental income when it’s not in use by the owners.

The three-bedroom beachfront home includes a pool and outdoor entertainment area with a picnic table, sink, and fridge—and the house comes furnished. It’s just a block from downtown St. George Island shops and restaurants.

Apparently, someone has been sold on it, since it looks as if a sale is pending, after a little more than two weeks on the market.

St. George Island, FL
St. George Island, FL

realtor.com

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Price: $579,000 or 12.17 bitcoin
Property perks: Enjoy the peaceful serenity of 20 acres in this home, built in 2016.

The two-story, five-bedroom abode is spread over three levels.The open-concept main level includes a living room with cathedral ceilings and a stone fireplace, a gourmet kitchen with an island, a formal dining room, and two offices.

The walkout lower level comes with a wet bar and bathroom. Along with a deck and backyard, the property includes ATV trails and flat areas for a pavilion or fire pit.

Port Crane, NY
Port Crane, NY

realtor.com

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Price: $898,000, or 18.80 bitcoin
Property perks: Located in the exclusive Excelsior Tower of The Americana at Brand, this two-bedroom condo is perched above shops and restaurants.

With 1,335 square feet, the layout includes a designer kitchen with high-end appliances, Caesarstone countertops, and a custom tile backsplash.

The living and dining area includes hardwood flooring and glass doors that open to a private balcony. Bathrooms boast marble counters, and the bedrooms come with wool carpet. Building perks include two parking spots, concierge service, and a takeout and grocery-delivery service.

Glendale, CA
Glendale, CA

realtor.com

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Price: $335,000, or 7 bitcoin
Property perks: This completely remodeled one-bedroom condo features skyline and water vistas. Take in the views from the private balcony off the living and dining area, which features an open kitchen and contemporary design.

The building offers a gym, tennis court, and parking space. Located in the Brickell neighborhood, this place is close to restaurants, shops, parks, and the beach.

Miami, FL
Miami, FL

realtor.com

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Price: $2,870,000, or 59.99 bitcoin
Property perks: This spacious “home in the sky” comes with private elevators and unobstructed water and city views.

The light-filled four-bedroom unit comes with tile floors, and a gourmet kitchen with stainless-steel Sub-Zero fridge and Miele appliances.

A formal dining room and living room both open to the balcony. The master bedroom has glass doors and balcony access, an en suite bathroom, and a walk-in closet. Three balconies offer plenty of choices for basking in the sun.

Miami, FL
Miami, FL

realtor.com

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Price: $1,119,000, or 23.42 bitcoin
Property perks: Located just outside town and about 15 minutes to Sundance, this 13-acre property includes a five-bedroom main house with room enough to add another dwelling.

The 4,705-square-foot custom home has a formal dining and living area, plus a separate, eat-in kitchen. The family room has a fireplace and easy access to the outdoors.

A master bedroom includes a sitting area plus a balcony. For folks looking to farm more than cryptocurrency, the grounds include a barn and two livestock corrals.

Wallsburg, UT
Wallsburg, UT

realtor.com

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Price: $608,000, or 12.73 bitcoin
Property perks: Built in 2005, this golf-course home has been “meticulously maintained.” The layout of the four-bedroom residence includes a formal dining room and redone island kitchen, with top-of-the-line appliances.

Upstairs, the oversized master suite has two walk-in closets and a balcony with golf course views. Along with front and rear porches, the property comes with an oversized, two-car garage.

The large lot has a big backyard with a fire pit and swim spa. After a price drop last month, the charming abode may have found a buyer.

Fort Myers, FL
Fort Myers, FL

realtor.com

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Price: $377,600, or 7.81 bitcoin
Property perks: Move right in to this fully remodeled corner-unit condo, with water views. The two-bedroom space features a wide open, state-of-the-art kitchen with new appliances and stone countertops.

The living and dining areas open to a patio, and the ceilings feature LED lighting in every room. Building amenities include two pools with daytime cabanas, tennis courts, a putting green, and a gym.

Aventura, FL
Aventura, FL

realtor.com

Source: realtor.com

How to Make a Competitive Offer Against All-Cash Home Buyers

Buyers who aren’t paying cash for a house aren’t necessarily out of luck. Here’s how you can gain an edge over cash buyers.

Buyers making a cash offer on a house are active in many markets, and they can strike fear in new buyers who are bidding on a home. Cash home buyers can perform and close quickly and provide sellers with a sense of comfort.

But does this mean a solid buyer putting down 20 percent or more shouldn’t attempt to compete with cash home buyers? Absolutely not.

What if you can’t make a cash offer on a house?

The truth is, a buyer getting a mortgage can still compete against cash home buyers and win.

These are the questions that can make the difference:

  • Do you have a 20-percent down payment?
  • Are you well employed?
  • Do you have cash reserves in addition to your down payment?
  • Do you have very little debt?
  • Do you have good credit?

If you answered yes to most or all of these questions, your purchase should be as bulletproof as a cash home buyer’s.

Paying cash for a house doesn’t guarantee a buyer will win over the seller. Well-qualified buyers who put in a little extra effort can seal the deal.

How can you compete against cash home buyers?

  • Be up front about your finances. Make your competitive offer as strong as cash by providing the seller the confidence they need to accept your offer. In addition to a pre-approval letter from your lender, be open to allowing your agent or lender to provide financial information with your offer. Tell them what you make, and how much money you have in the bank. Show bank statements and even a copy of your credit report. Overload the seller to show them that you’re as solid as the cash buyer.
  • Ask your lender to get a head start on the mortgage. See if your mortgage professional can move the process along sooner. Send the lender a copy of the preliminary title report, if available. If you’re buying a condo, find out if a condo questionnaire is available and give it to your lender. If you take any of these steps, let the seller know. Of course, if you have not already, provide the necessary financial documentation to your lender right away.
  • Shorten the loan and appraisal contingencies. Ask your lender how quickly they can send an appraiser to the property, and how long the loan would take to turn around. In some parts of the country, loans are being approved in less than 14 days — sometimes even 10.
  • Pre-order an appraisal. This may not be as easy with a bigger bank. But smaller banks, direct lenders or mortgage brokers can line up the appraisal in advance. At the time your offer is written, tell the seller the appraisal has already been ordered. If you can get the appraiser out within 24-48 hours of coming to terms with the seller, it’s half the battle.
  • Inspect quickly. Along with the quick appraisal and loan contingencies, get your inspector in and out. Shelling out a few hundred dollars and getting the inspections done within days of having your offer accepted shows the seller you mean business. It also gives them comfort that they’ll get over the biggest hurdle quickly.
  • Overpay. Cash buyers nearly always expect a discount from the seller simply because they’re offering cash and are a sure thing. As a result, the cash buyer will often make a lower offer. To increase your chances, top the cash offer, even if means paying a little more than you think the home is worth. If a seller is faced with a few thousand dollars’ difference, the seller probably wouldn’t risk it. But what if your offer is five percent higher than the cash buyer’s? The seller, perhaps wanting the best of both worlds, may ask the cash buyer to raise his or her offer. Some cash buyers will offer more, but not always enough to match. If you plan to live in the house for many years and it’s the home of your dreams, paying a little more to get the deal might only translate into $20 per month over the course of a long-term mortgage.
  • Make yourself known to the seller. Some buyers write “love letters” to sellers, hoping to appeal to their personal side. Does this work? Sometimes! If you’re competing with a cash buyer, particularly an investor who plans to rent the home out, it can’t hurt to get a little personal with your real estate offer letter. The seller almost always wants to know more about the potential buyer. Ask your agent to write a cover letter and an introduction. Let the seller know who you are, why you like the home and what your intentions are.

Do the best you can and be realistic. Make sure your financial “‘house” is in order. Work with a good local real estate agent, and start working with a local mortgage professional well in advance. Structure your offer to show that you’re ready to roll.

For more home-buying tips, check out our Home Buyers Guide.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Source: zillow.com

Expert Homebuying Tips for Buying in a Seller’s Market

According to buyer protection laws in most states, sellers are required to report any findings in home inspections to subsequent buyers. In other words, if an inspector finds something wrong with the house, the seller will have to deal with it one way or another— either with you, or the next buyer should you choose to drop out of the deal.
When trying to woo your seller in a competitive market, it helps to make a generous earnest money deposit. An earnest money deposit is a good-faith deposit requested by the seller when you enter into a contract to buy the house and typically run anywhere from 1% to 3% of the sale price of the home.
This might sound crazy, but making a good impression on your new neighbors can actually make a difference when it comes time for a seller to review offers.

Get a Pre-Approval Letter

Larissa Runkle is a contributor to The Penny Hoarder.
Another way to win over your seller (and prevail in any bidding wars) is by keeping your contingencies to a minimum.
“In a really aggressive seller’s market, a home buyer who has to sell a current property should do so before placing an offer on another home,” said Jason Gelios of Community Choice Realty. “Don’t always assume that the seller will take the highest price. Other conveniences can play a factor in gaining the seller’s attention, especially things like faster closing times and less restrictions.”
In order to be competitive in a hot seller’s market, you will need to line up your financing in advance.
Source: thepennyhoarder.com

Be Friendly With Neighbors

Let’s say the listing price on your dream home is 0,000 and you’re able to put down a 6% down payment. That leaves you with a mortgage of roughly 1,000. For a 30-year fixed mortgage at an interest rate of 3%, that translates into ,269 monthly payments. Now let’s say you decide to bid a little higher on the home and offer ,000 over asking price. This would only bump up your monthly payment (assuming you qualify for that low interest rate) by .
Contingencies are the contractual stipulations buyers and sellers must meet before the deal can close. Unsurprisingly, sellers don’t like to have too many of them to deal with. Contingencies can include such things as requesting a seller to make certain repairs, getting a home inspection, or even the fact that you’ll need to sell your old house before being able to buy the new one.
If that sounds fast, it is. But by the time we submitted our offer, the seller already had three others. This is where it helps to have a great real estate agent on your side.

Submit an Offer Quickly

I was in this exact position last fall. Here are seven key takeaways from my experience buying in a seller’s market.
While my partner and I didn’t make the highest offer on our house, we did have the fewest contingencies — mainly, we didn’t ask too much of our seller in the way of repairs, or have another house to sell in order to afford the new one.
After you’ve seen a house, and decided you love it, be prepared to submit an offer quickly— as in, ASAP.
Buying a house is a big decision, but it can feel especially overwhelming to place an offer on a home less than 24 hours after seeing it for the first time. Plus you’re under pressure to outbid several other buyers — or risk losing the house.
“It’s important to understand that the strength of financing is a key consideration a seller takes into account when selecting an offer,” said real estate developer Bill Samuel.

Minimize Your Contingencies (Within Reason)

Work with your real estate agent to determine how many other offers the seller already has (or expects to get) and then be prepared to draft something up that day. In our case, we toured our home for the very first time at 11 a.m. on a Monday — it came on the market the evening before — and made an offer by 4 p.m. that same day.
Work with your real estate agent to find out what matters most to the seller — is it money, closing quickly, something else entirely? Then make sure your offer addresses their needs.
“Having a realtor who can get your offer submitted quickly is crucial,” said Erik Wright, owner of New Horizon Home Buyers. “You want to get your offer in front of the seller first, and make it strong. Purchase price is the obvious factor and in a competitive market, houses often go for over asking price. However, a strong offer has several factors and it depends on what’s most important to the seller.”
Wait. Why would anyone make an offer that’s above asking price? Because the competition did it first, and in a hot seller’s market, offering above asking price is often what it takes to even be considered.
In a hot seller’s market, you’ve got to be ready to move fast. Often this is more of a change in mindset than anything else. When my partner and I first started looking at homes, we considered ourselves casual buyers — that is, until our dream home came on the market late one Sunday night. From there, things moved quickly. We saw the home, made an offer, were under contract by morning, and spent the next month and a half going through the process of closing on the house.
Besides all the usual suspects, like saving up for a down payment and improving your credit score, you’ll also want to get a pre-approval letter from your bank. It states that a bank would approve you for a mortgage of a certain amount, and acts as a guarantee to the seller that you can actually afford to buy their house.

Make a Generous Earnest Money Deposit

This is where it helps to know your budget up front.
When deciding how much of an earnest money deposit to include in your offer, keep in mind that whatever amount you give comes off the price of the home (and is returned to you if the deal falls through). In other words, there’s no reason to be cheap. If you can, go slightly above the seller’s requested deposit amount. Even if it’s just a little more than what they’re asking, that gesture of good faith might just be what gets you the house.

A row of houses on a cul de sac in a suburban neighborhood.
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Offer Above Asking Price

Since you’ll likely be visiting the home at least once before making an offer, be prepared to talk to any neighbors you might run into. In close-knit neighborhoods, or ones where people share resources (like an HOA), sellers might care a bit more about the type of person they sell the house to.
If you’re serious about finding your dream home in the next few months, the best thing you can do is know what you want from the outset, and get your ducks in a row to make a compelling offer when you find it. Maybe this means making a list of your must-haves in a house, and working to improve your credit score. It might also mean reaching out to a real estate agent before you need one, and getting that pre-approval letter in place.
No seller wants to risk accepting an offer that might fall through. Aand since pre-approval letters can take some time to get, have one ready before you find your dream house.

Lace Up Your Running Shoes

Upping your offer may not break the bank as much as you’re fearing. “With interest rates so low these days, offering more than what the seller is asking may not make a drastic difference in your overall monthly payments,” real estate agent Pavel Khaykin of Pavel Buys Houses said.
All that said, there are certain contingencies you should never forgo, and a home inspection is one of them. Getting your home inspected is hugely important, since inspectors will often find things even the sellers weren’t aware of. No matter how much you love a house, don’t be afraid of exercising your right to an inspection.
Although inventory is low, new houses come on the market all the time.
If you happen to meet a neighbor when visiting the home, introduce yourself and make a good impression. You never know how much their opinion of you might factor into any final decisions.
While these circumstances might sound extraordinary, they’re not. With housing inventory nationwide at an all time-low — down 22% from last year according to the National Association of Realtors — it’s no wonder buyers are competing for the same few houses.

Is a Dual Agency Relationship Risky?

Can one agent represent both parties? The answer: It depends.

Buyers and sellers sometimes have the option of entering into a dual agency relationship with their real estate agent. Although this is not necessarily a problem, you should be aware of exactly what a dual real estate agency means and the restrictions it can place on your agent.

What is a dual real estate agency?

The term “agency” refers to the relationship that you, as a buyer or seller, have with your real estate agent. Dual agencies can occur with two agents or with a single agent.

A dual agency with two agents can occur when the buyer’s agent and the seller’s agent are licensed under the same broker.

In a dual agency with a single agent, potential buyers may ask a seller’s real estate agent to submit an offer on their behalf. In this case, the agent is acting as a dual agent.

Dual real estate agency disclosure

Because dual agencies represent a conflict of interest for the buyer and seller, some states don’t allow them.

In states where dual agencies are legal, however, the law requires that a dual real estate agent inform both the buyer and seller of a dual real estate agency. These two parties must also sign consent forms indicating that they understand the concept of dual agency, as well as the restrictions imposed on the real estate agent by this type of agreement.

If either the buyer or the seller refuses to sign the dual agency agreement, the transaction cannot continue. Once the dual agency agreement is executed, the real estate agent becomes known as the disclosed dual agent.

Disadvantages of dual agencies

Dual agency imposes some restrictions on a real estate agent. The agent is required to treat both buyer and seller with fairness and honesty.

The agent is required to provide full disclosure concerning the property to the buyer, but they cannot reveal confidential information about the seller. When the time comes to make an offer, a dual real estate agent cannot advise the buyer on how much to offer, nor can they advise the seller to accept or reject an offer.

In a New York Department of State memo, consumers are advised to be wary of dual agency relationships. The memo states that when a person enters into a dual agency relationship, they are forfeiting their right to that agent’s loyalty. The agent then cannot advance the interests of either party.

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Source: zillow.com