Offers with ZERO Contingencies

September 23, 2021

Offers with ZERO Contingencies
Over the past few months we have received a few non-contingent offers on our listings. Contingencies are certain things that a buyer checks off through a transaction. Contingencies can include investigation, appraisal, financing, HOA information, title information, and even the sale of a buyer’s existing home. Removal of any contingency with an offer means a buyer is taking that contingency off the table. Let’s dive in…
 
A buyer who makes an offer contingent upon the property appraising is requiring that an Appraiser ensure the contract price is legitimate. If the home appraises for less than the contract price the buyer isn’t obligated to purchase the home at the contract price. If the home appraises for more than the contract price that’s great, but it doesn’t change the sales price. A buyer who removes the appraisal contingency with their offer is stating they don’t care if the home appraises for less than the contract. They will buy it anyways. This can mean they need to bring more money into escrow to make up the difference.
 
A buyer who removes the buyer’s investigation contingency is stating they will purchase the home regardless of what comes up in reports, disclosures, or inspections. A buyer who acts in such a manner had better think about the worst case scenario. In an ideal world this buyer would have access to an inspection and all reports prior to making this sort of offer. A buyer is welcome to do their own due diligence once in escrow, but they have no rights to bring a request for repairs / credit to the seller in the hopes of renegotiating.
 
A buyer who removes a loan contingency with their offer is usually a cash buyer. That being said, any buyer may remove this contingency. To do so a buyer would need to be certain their loan will go through, or have the ability to purchase a property with cash.
 
We had an instance this year where a buyer made an offer with zero contingencies. We represented the seller in this transaction. Once in escrow the buyer decided the home was not for them. This buyer had zero rights to the deposit, and they ended up walking away from a $40,000 deposit, which the seller retained as damages. The buyer made a business decision to walk away from the deal, and the seller made a business decision to retain the deposit. That was wild.
 
Another transaction, where we represented the seller, featured an offer with all buyer investigation contingencies and the appraisal removed from the contract. The buyer still needed to get the appraisal for their lender, but as mentioned above, the appraisal value was to have no influence on the transaction. The buyer proceeded to do a myriad of inspections, even after we provided a home inspection and termite inspection to all interested parties prior to accepting an offer. We provided these inspections upfront because wanted to get all of our cards on the table. The buyer came back at the eleventh hour and asked for a major reduction in price / credit after doing their investigations. We had no obligation to renegotiate as they removed their entire investigation contingency with their offer. Our disclosures didn’t come into play because they had removed their entire investigation contingency. They had also had our seller’s disclosures for a significant amount of time too prior to making this last minute request. The buyer’s Realtor stated their client’s loan had been approved so we requested their loan contingency removal, which represented their final contingency removal. When we obtained the loan contingency removal our transaction was solidified without any change in price or terms. Had the buyer declined to move forward they’re deposit would be in jeopardy.
 
Buyers should know what they’re agreeing to when making offers without contingencies. These offers can prove costly. Make sure you’re working with a Realtor who understands the contract.

Recent Blog Posts

Stay up to date on the latest real estate trends.

The DST is Ideal For Aging Investment Property Owners

February 15, 2024

Perch Wealth, Featured in BIZNOW, explains DSTs

Mortgage Rates, Home Values & The Rental Market

September 28, 2022

Mortgage interest rates play a huge role in home values. These rates are now at 2002 levels, up sharply from all time lows in 2021. The average 30 year fixed mortgage … Read more

Out of State Investing

April 7, 2022

Let’s face it… A lot of real estate investors are priced out of California, and prices are continuing to climb. Here is an example. In 2012 an investor could purchase … Read more

Out of State Investing

April 6, 2022

Let’s face it… A lot of real estate investors are priced out of California, and prices are continuing to climb.

Use a Liquidator Instead

March 16, 2022

Market Real Estate specializes in selling inherited properties. Oftentimes our clients have a quite a project on their hands. One of their biggest concerns is what to … Read more

Use a Liquidator Instead

March 15, 2022

Market Real Estate specializes in selling inherited properties.

Pre-Sale Improvements that Add Value

January 6, 2022

We highly recommend a fresh coat of paint. Paint creates a huge return on investment. The “in-style” colors seem to change fairly quickly these days. We went from tans… Read more

Pay Off Your Mortgage Quickly

December 30, 2021

Going back a few generations there was very little credit extended to people interested in purchasing real estate. Fast forward to the first decade of the 2000’s credi… Read more

Appeal of Cash Buyers… Let’s make you one!

December 14, 2021

There is a lot of competition amongst buyers in our housing market. There are simply more buyers than properties available. There also happens to be quite a few buyers… Read more

Let's Talk

You’ve got questions and we can’t wait to answer them.