Way Out On A Limb

Yet another aspect of the insanity of the current marketplace and one that’s becoming more and more prevalent is the practice of dispensing with any and all contingencies in order to get a home in competition. In the last few weeks especially it seems to quickly becoming the norm. Honestly…I hate the idea. Talk about going way out on a limb! You can, of course, inspect all you want…you just don’t have a contingency to negotiate further over what you might discover. You also can’t back out over these discoveries either.

The long limb really applies to the appraisal and loan contingencies. Since this is a new phenomenon, the values that are coming in on appraisals are typically below the comparable sales for any time prior to. Many times the buyer will check the No appraisal contingency box which means In essence the buyers are saying “Don’t worry about the appraisal, if it doesn’t come in we’ll go ahead and make up the difference in cash to make this deal close.” This can be pretty risky stuff. You’re really guaranteeing the sale for the seller to get them to take your offer.

 I really hope it doesn’t start becoming the "Norm" If you don’t have 20% down you’re at risk. I actually had an agent tell me today that she received an offer on a Four Hundred Thousand dollar plus house where an agent presenting an offer with 25% down apologized for not writing an all cash offer. “I’m really sorry, but my clients need a loan” she heard the agent say. Amazing!