Home Buying in Dublin>Question Details

siaj_nad, Home Buyer in Fremont, CA

No contingency offer with option of rent back for cople months ?

Asked by siaj_nad, Fremont, CA Mon Feb 25, 2013

Getting ready to put an offer on a house for which seller advised to keep short contingency. Based on market conditions, we are going ahead with no contingency along with option to rent back for couple months. The seller is relocating to new house which will be ready in couple months. The are selling AS IS. The home inspection report is pretty recent and there is no damage but minor leakage which I have verified will cost cople grand to fix.
Is No Contingency normal these days ? or Am i being going overboard here.

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Answers

8
Buyers face many challenges in the current market. Your situation is not unique.

Answering your questions:

Yes…offers without contingencies are not unusual in this market.

Are you going overboard? I don’t know. If you completely understand the risk that you are taking by making an offer without contingencies and you can financially cover any problems that might arise due the appraisal problems that may arise (if you are not a cash buyer) or property condition issues that may arise (it looks like you have already had at least some inspections done) then perhaps you should forge ahead.

I also hope that you are getting good advice from your own Realtor and not the sellers agent or –egads! – trying to go without professional representation.
0 votes Thank Flag Link Tue Feb 26, 2013
It sounds like you may be offering cash deal. If so, I would recommend keeping a 5 day contingency period and get a home inspection even if they provided one for review. It’s only 200-400 depending on property type/size and well worth the cost.

Good luck

Steve Colvin
Premier Ca Realty
0 votes Thank Flag Link Tue Feb 26, 2013
So is this a short sale requiring bank approval? that protects the seller. Dont bet on closing before they give up possession if its a short sale.
0 votes Thank Flag Link Tue Feb 26, 2013
no, it is not a short sale. owner is moving out to new home and it is not ready yet. it will be ready by end of May.
Flag Tue Feb 26, 2013
Throwing caution to the winds is one way of doing things but my recommendation would be to make sure you don't go in non contingent on the loan. The rent back is a great new concept that sellers are coming out with but be extra careful on that. I had to do that on two deals and in one the seller dumped their crap in the house/front lawn/backyard and left !! The listing agent did not have the decency to show up on the final walk through and refused to help cleaning up the mess. In the other transaction, the seller did not do a rent back but a longer close of escrow but did not take care of the house. My client moved in to find to her dismay that the bath tub was clogging and backing up ( which did not show up in the inspections) and it took a couple of hundred bucks to get it fixed.
Web Reference: http://www.ramamehra.com
0 votes Thank Flag Link Tue Feb 26, 2013
You have many options in this crazy market.
Firstly get yourself an agent that is experienced and knows how to write a very strong offer and leaves you protected.

You do not have to waive all your contingencies, you have the right to do inspections per the contract.
Have your lender send your loan to underwriting so you don't have a Loan Contingency. Do you homework with comps. Have the agent show you everything that is selling and if they are good they will call pending's to find out how many offers and sales price.
You can make an offer armed with information so you are comfortable and you don't feel you are making a risky move.
Please email and I can go over more tactics.
joann@joannwheeler.com

Good Luck

JoAnn
0 votes Thank Flag Link Tue Feb 26, 2013
Waiving the appraisal contingency is becoming more normal in this market. I would keep the inspection contingency and have m own inspector check out the property. You could shorten the inspection period to 7 days or so. As far as the loan contingency, only you know what your situation is. Get your lender's input on this if you are financing.
Good luck,
0 votes Thank Flag Link Tue Feb 26, 2013
It is a crazy seller's market which makes it tempting to throw caution to the wind just to win.

It's a dangerous practice to have no contingencies of any kind. I can understand waiving buyer inspection contingency...but how about loan appraisal and loan approval?

Unless you're paying cash....If you bid more than what your loan appraiser says it's worth, are you willing to make up the difference between your offer and what the bank is willing to lend you?

Instead of rent back, you may consider free rent to the seller for 30-60 days, i.e. if you can afford it

How about the terms of your offer....make it easy for your seller, and enable him to walk away with more cash by taking responsibility for certain costs, such as county transfer taxes (there is no city transfer tax in Dublin), compliance with government requirements/ordinances...

You can even offer to pay for some of the commissions the seller pays

Or even offer your initial deposit as non-refundable if you back out for any reason.

Discuss with your realtor in what are the most attractive options to help you in this market. But writing offers without contingencies is hardly normal.
0 votes Thank Flag Link Mon Feb 25, 2013
In this market there are a lot risk takers going with No Contingencies. The problem with that though you have no protection. I'd always advise on getting an Inspection and as a Buyer you have every right to, even if you offered a 10 day Contingency period you can still get inspections and approve them in that time. Loan and Appraisal contingencies can be waived upfront though, as all you need is to get full underwriter approval and as a Buyer have funds available to cover any difference on an Appraisal.

They are a lot f creative ways to write a strong offer in this market, and as long as you are working with a good agent who knows the market well, they should be able to advise you in the best option and is strong but still gives you as a Buyer some protection.

Good luck with your offer its tough out there for Buyers.
0 votes Thank Flag Link Mon Feb 25, 2013
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