Finding Gray Areas In Inspection and Appraisal Contingencies


Finding Gray Areas In Inspection and Appraisal Contingencies
By Scott Rogers • April 19, 2021
It's a crazy market right now. There are definitely many more buyers than sellers in most segments of our local housing market. As such, buyers are having to make difficult decisions about what contingencies to include in their offers. The two prime examples are the INSPECTION and APPRAISAL contingencies. INSPECTION... Most buyers want to conduct a home inspection as a part of the purchase process to make sure they are not buying a house with major issues. When there are many offers on a new listing there is often at least one buyer who is willing to waive the inspection contingency. Thus, many buyers are left wondering if they need to go ahead and waive their inspection contingency even if that is definitely NOT what they want to do. APPRAISAL... Most buyers want to have the ability to renegotiate the purchase price if the appraised value comes back as being lower than the contract price. Without an appraisal contingency, and thus without the ability to renegotiate the contract price, they can be in a tough spot of coming up with more cash to make the home purchase work. When there are many offers on a new listing there is often at least one buyer who is willing to waive the appraisal contingency. Thus, many buyers are left wondering if they need to go ahead and waive their appraisal contingency even if that is definitely NOT what they want to do. But maybe there can be a gray area between having and not having these contingencies in your offer? INSPECTION... Perhaps your offer could be contingent on a home inspection, but... you remove the option of terminating the contract without having given the seller the opportunity to respond to a repairs request you agree to only request repairs if there are any needed repairs that are expected to cost more than $2,500 to remedy, or if all needed repairs are expected to cost more than $5,000 to remedy APPRAISAL... Perhaps your offer of $300K could be contingent on an appraisal, but... so long as the appraisal is equal to or above $290K, you agree to proceed to settlement despite the lower appraised value if the appraised value is lower than $290K you reserve the right to propose a new contract price or terminate the contract These are some basic examples of how to aim for that gray area between overtly contingent and not at all contingent. If you are buying in this market, have these conversations earlier than later to know what levels of contingencies you are comfortable having in your offer to buy any particular property. Receive Updates by Email Recent Articles: Is There A Price You WOULD Pay For This House? 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
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 24, 2024 (unless otherwise noted).
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