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Contingencies are designed to protect you in case something happens and you don’t buy a home you made an offer on. Should you ever waive them? Waiving contingencies can be a risky process, even if it makes a buyer look more favorably on your offer during a bidding war.
Contingency clauses in your offer can protect you against a range of things happening that might make you need to back out of a home purchase. Most contingencies are designed to make sure you get your earnest money back. Common contingencies include requirements that the home appraise at or above asking price, that a home inspection returns a satisfactory report, and that your financing comes through. If anything goes amiss, you can walk away and your earnest money will be returned.
The contingencies mentioned above are standard and not something a seller would be surprised by; however, if you push the expiration of these contingencies too late in the closing cycle the seller may see this as a sign you aren’t as serious about buying the home and you’re trying to maintain a way to get out of the contract for as long as possible. They may feel you’re hedging, and keeping your options open in case a better home comes on the market. This could make them more eager to go with a buyer’s offer that has contingencies waived, instead.
Waiving contingencies is typically a bad idea, assuming the contingency is included because of a very real fear. If you have an underwritten preapproval, great credit, and a substantial down payment (or you can buy the home with cash if you lose your job or something else unexpected arises that creates an issue with your financing) you may waive your financing contingency. If the home is almost brand new, you might not be as concerned about the home inspection.
If you want the house no matter what it is appraised at, and can come up with extra cash if needed to make up the difference between the asking price and what the bank may be willing to loan you, even the appraisal contingency may not be a dealbreaker.
The most effective course of action may be to include all contingencies in your offer, then say you will waive all but the most important to you. This can sweeten the pot for the seller without really costing you anything, and make you more attractive since you’ve shown you are willing to play ball.
Overall, if you have any concerns, it might be better to leave the contingencies in your offer and risk losing a property. It could be a better option than ending up with your dream home, but being severely underwater financially.
We’ve fine-tuned the preapproval process to make it one of the easiest experiences you’ll have in the whole home buying process. Buying a home should be fun and exciting, not stressful. Get preapproved today!
Sammamish Mortgage has been in business since 1992, and has assisted many home buyers in the Pacific Northwest. If you are looking for mortgage financing in Washington State, we can help. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon and Washington.
Contact us if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.