When and where are contingencies made?

Question

Hello BP friends!

At what point in the purchasing process are the contingencies made?

For example, if you were looking to flip a house, when you make your initial offer, is that when you mention that you would like an inspection contingency? Or would that be in another step?

Thanks in advanced as always!

Molly Trapp · Answer

Another thought is that you can "double dip" as Jerry Norton (Flipping Mastery) suggests - Ask the listing agent if they can represent you as well. (Some states don't allow that but there's ways around that like they ask another agent in their brokerage to help out and I'm guessing there's some commission sharing between them.) If so, you can ask them to do a FaceTime walk-through with you as you'd eventually be paying them a commission as well so they'll be willing to do some boots-on-the-ground work for you.

Bobby Nilsen · Answer

@Danny Jimenez Contingencies are usually standard in real estate contracts, meaning unless the contract is changed there will be a contingency, in California CAR contract if we change nothing there’s contingencies in the 15+ day range for loan, appraisal and inspection. We always go in with at least a day because that’s the time we need. Find out how much time you need and go from there. I wouldn’t make a verbal and do inspections based off of that. Next thing you know they accept a different offer and you are SOL. The verbal is just to give you an idea if it’s worth writing, this is something we do in the CA market. This market is changing but the shorter the better always makes the offer stronger. If we need to extend the contingency when we get to the deadline we ask for that or a price reduction to justify removing the contingencies, if neither gets accepted we cancel and move on to the next property. Don’t overanalyze what you’re doing. Start going down the road and chatting with your agent and this will start to come together and make sense. Always err on your side of comfortability and don’t let an agent talk you into doing something you don’t want to do. Write a ton of offers before getting one accepted. Familiarize yourself with the contract so you know what your signing and getting yourself into.

Danny Jimenez · Answer

@Rick Albert ahhh got it. I was just trying to fully understand how it worked and when I supposed to mention I wanted a contingency in place. Really appreciate the clarity Rick! @Bobby Nilsen sorry if this is a silly question but what do you mean by that they are boiler plate in most contracts? I am planning to do all this out of state so having an inspection done probably wouldn't be doable the very next day id imagine correct?I want to make sure I actually know what im saying when I finally submit a offer! If in the case I was to follow the same footsteps, I could make a "verbal offer" have an inspection done and THEN make a formal written offer or would that not be able to be done since I wouldn't be able to do the inspection the very next day? Let me know your thoughts.Appreciate you guys helping out!

Bobby Nilsen · Answer

@Danny Jimenez The contingencies are usually boiler plate in most contracts, the length is just determined for each. But before presenting a formal contract I usually make a verbal offer with these items below. The answer to the verbal usually gives us a great idea if and how we should formally write. We always go in with at least a day contingency so we can at a minimum walk the property to make sure there are no red flags. And worst case we can then renegotiate the contingency or price to make it work. Price Contingencies Length of close

Rick Albert · Answer

@Danny JimenezThe short answer is yes. As long as you have the inspection contingency in place, and you find something on the inspection reports that you don’t like and the seller isn’t willing to renegotiate, you can cancel. However I tell all my clients to at least try to renegotiate before canceling because no property is perfect.

Rick Albert · Answer

You set up the contingencies in the initial offer. It's all part of the negotiations.

Danny Jimenez · Answer

@Bobby Nilsen Ah okay completely understood! Good to know if the deadline approaches and it is denied as well as the price reduction denial its best to just walk away and move to the next deal. That way I don't rush into it and make a bad decision!Appreciate the advice brotha!

Danny Jimenez · Answer

hey @Rick Albert ! Thank you for that reply, and in the case lets say an inspection contingency is made and something is on the inspection that would make me no longer want to pursue that property, I would be able to back out of the deal without losing my earnest money? Additionally, with a inspection contingency in place, could the buyer technically back out for any reason they claim on the inspection? Thank you for your time!