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Contingencies and House Offers: What You Need to Know

Just like everyone talks about the excitement of college but not the uncomfortable dorm beds, just like people say they had a “great time” at Thanksgiving but skip the part where Aunt Tonya said the government was spying on her, contingencies are an often unmentioned—but highly important—part of the home buying process.

Except unlike those aforementioned scenarios, contingencies are a good thing. They protect you in the process of buying a home, which is likely the biggest financial investment you’ll make in your lifetime. Take a look at how contingent offers on a house work!

Types of Contingencies

Getting your offer accepted feels amazing, but before you officially seal the deal,, you want to make sure you’ve covered your bases. There are three main types of contingencies that people include in their written offer:

Financing

Pre-approval on a loan does not guarantee approval for on your actual loan application. The bank might not agree with the house you chose, or their appointed appraiser might find the home’s value at less than what you’re asking to borrow. If you include this contingency into your offer, you’ll be able to back out of the contract.

Home Inspection

Home inspections examine the condition of a property and inform you of any issues. They happen after your offer is accepted, which is why you want to make the sale contingent on the inspection results. Minor bathroom fixes may only be $100 or so; cracks in the foundation are another story.

If you don’t include inspection contingencies in your offer, you’re agreeing to accept the home as-is. This adds risk to your investment—you could end up spending thousands on previously unnoticed repairs. However, people who invest in real estate and flip houses purposely accept a home as-is so that they can close faster and start renovating. 

Needless to say, you have options with home inspections when making a contingent offer on a house. The best thing you can do is to make this contingency decision with intention and in alliance with your needs.

Home Sale

First-time property owners won’t have to worry about this one, but it’s good to know all the same. If you currently own a house and are worried about it selling in time for closing, make a contingency that buying a new house depends on the sale of your existing home. But be wary of this contingency—today’s market is highly competitive. Your offer could be rejected if a home sale contingency is in place.

Writing Contingencies

There’s a delicate balance to writing contingencies in your offer. On the one hand, you want to protect yourself as you move forward with this massive investment. On the other, your contingencies (depending on what they are) could leave your letter of offer repeatedly rejected.

Sellers may get several offers; they may even get dozens. You’ll want your offer to stand out, but you won’t want to compromise your finances in the process.

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That’s the great thing about working with RealtyHive. Sellers don’t have to worry about contingencies when selling at a time-limited event, and can even end up with more offers. Look for your next home or sell your current one with RealtyHive. We’ll help you navigate!

handing over rent keys

5 Reasons to Rent Instead of Rushing to Buy

Home shopping can be an exciting, yet nerve-wracking time. There are a lot of important decisions to be made and those choices can impact you and your family for many years to come. Is this the right house? Are we getting a fair deal? Are we making the right choice?

In a highly competitive housing market, there can be huge disadvantages to taking the time to carefully consider your decision. Wait to submit the offer? Lose the house. Have to sell your house before you can buy? You might get lucky, maybe not. It may seem counterintuitive to go from homeownership to renting, just to go back owning again, but here’s why you may want to consider renting instead of rushing.  

5 Reasons to Rent Instead of Rushing to Buy

       1). You’ll know your budget

A huge advantage to selling your home before you buy a new one is that you’ll know exactly what you’re working with in terms of finances. Planning on upsizing? You’ll want to know how much of a price increase you can afford. Downsizing? You’ll need to consider what to do with the profits of your sale. Either way, it’s much easier to do this math when you know what you’re concretely working with.

        2). You’ll be first in line

Without having a home of your own to sell before buying a new one, you are able to submit a more enticing offer to sellers, especially those looking for a quick close. This free-and-clear method, paired with knowing your budget, means that you will be ready to act on any home that interests you and work on your own timeframe.

       3). You can take advantage of the hot market

Real estate prices are at an all-time high in a lot of places, but experts debate how long this streak will last. Now may be the time for you to sell at a premium, but that doesn’t mean you want to buy at a premium, either. Rent just until you find the right deal.

       4). Buying a fixer-upper is a little easier

If you’ve already found a place to rent and you’re getting accustomed to your new temporary digs, it might not be such a stretch for you to imagine staying a little longer. Instead of buying a more expensive move-in ready home, you make the option of a reno project a little more palatable. After all, you just moved in, what’s another month or two– especially if it’ll shave a few years off your mortgage.

       5). You may get to remember the joys of renting

Building amenities are one of the truly great things about rental life and can be a great upside to renting between homes. From included utilities to complementary gyms or community pools, these features can definitely help to smooth the transition.

Want to find your perfect home from motivated sellers who want to see your offer? Check out the properties in our next upcoming time-limited event by clicking here!