Risks of Removing Buyer’s Contingencies

Typical real estate offers include a wide variety of standard contingencies. These
can include home inspections, appraisal, and loan approval. In a fast-moving,
seller’s market, one of the ways to make an offer more appealing is to remove
contingencies.

Real estate contingencies are intended to protect the buyer from unforeseen
issues. Once these contingencies are removed, the buyer typically has no recourse
from these issues. The most important contingencies include:

• Home Inspections – including mold, well/septic, structural, geological
• Lending Approvals – including appraisal, title, loan rate and terms, final loan
approval
• Property Condition – this relates to the final walk-through, ensuring the
property has been maintained during the escrow period
Any, or all of these items can create problems during, and even after, the closing
period. Without the contingencies in place, the buyer is obligated to conclude the
sale and any financial costs incurred by the seller for not doing so, including the
forfeiture of their deposit.

Most of the United States is experiencing an advancing market. This means prices
are rising at a steady pace. As a result, both buyers and sellers expect to settle on
a sales price higher than recent, comparable sales.

Buyers are desperate to have
offers accepted and are willing to compromise on contingencies designed to
protect them. Ensure you thoroughly review all contingencies or the waiver of
them with your agent prior to making an offer.