While every home sale is different -- with unique contingencies based on the needs and situations of the buyer and seller -- there are three main hurdles that most buyers and the houses they are purchasing must clear to make it to closing.

So -- where is your contract in this process?  Have you cleared 1, 2 or 3 of the hurdles, thus far?  There will be plenty of other details to attend to, but these are the three main areas of focus.  Evaluating the property condition, the property value, and the buyer's finances....

INSPECTION - This is an evaluation, by a home inspector, of the condition of the house.  Clearing this hurdle typically involves requesting that the seller make some repairs to the house (or negotiate further on price) based on new information about the property condition discovered during the inspection process.

APPRAISAL - This is an evaluation, by an appraiser hired by the purchaser's lender, of the value of the house.  If the property appraises for the contract price (or higher), all is well -- otherwise, the buyer and seller  may need to renegotiate the contract price based on the appraised value.

LOAN APPROVAL - This is an evaluation, by a lender (and their underwriters) of the purchaser's financial situation.  The lender must confirm that the buyer has the income to support the mortgage payment required for purchasing the home.

Again - there are many other smaller hurdles (for example, a termite inspection) and larger hurdles (for example, a home sale contingency) that may need to be cleared in your purchase (or sale) of a home -- but these three main hurdles (inspection, appraisal, loan approval) are the three main mileposts during the contract-to-closing process that we'll be focused during the transaction.

BUT WAIT -- THERE'S MORE....

Would you rater have three main hurdles to clear, or six?



Let's imagine that you receive two offers on your house, which is listed for $250K....

• Offer 1 = $245K, contingent on an inspection, appraisal and loan approval
   
  
• Offer 2 = $250K, contingent on a home sale, inspection, appraisal and loan approval
  

In Offer #2 -- even if the house that they need to sell is already under contract, you must remember that by accepting a contract with a home sale contingency, you are likely, effectively doubling up on all of the main contract contingencies.  You're setting out six hurdles to be cleared, instead of just three. 

• The home inspection must be resolved successfully on your home, as well as your buyer's current home. 
   
• The appraisal must be approved on your home, as well as your buyer's home. 
   
• You're waiting on your buyer's loan approval, as well as your buyer's buyer's loan approval.

So -- a slightly higher sales price, with a home sale contingency, is not always more valuable to a seller than a slightly lower sales price without a home sale contingency.
 

Receive Updates by Email

Subscribe

Recent Articles:

• There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase
• Home Sales By Price Range In The City Of Harrisonburg
• Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later?
• How Much Slower Are The Winter Months In Our Local Housing Market?
• Rockingham County and New Home Sales Drive Surge in Area Housing Market
• Find The Balance Between Optimistic And Realistic Home Pricing
• Room Size Is Difficult To Understand Solely From Real Estate Photos
• How Much Would You Value Not Having To Prepare Your Home For Showings?
• One Out Of Four Homes Is Taking Longer Than A Month To Sell
• Consider The Cost Of Your Planned Renovations When Planning Your Offer

Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com