Do I have too many contingencies in my offer?

Question

Iv made maybe around 40 offers in my long distance market and only 1 under contract which I had to back out of.

The contingencies I include are these 4 things;

-10 days inspection period

-appraisal

-Financing

-seller must give buyer unrestricted access to property with 24h notice

I feel that maybe im getting beat out by offers which have little or no contingencies. Should I drop everything and just keep the inspection contingency ?

V.G Jason · Answer

Pre approved still requires financing contingency. What if he doesn't get fully approved by close? Tons of buyers were pre approved this year but failed to close due to financing. Pre approval process needs to be a bit more firm, but in a general agreement financing contingency is always there even if buyer is pre approved. Pre approved is almost worthless.

Harrison Chow · Answer

Here are some ideas on how to make your offers more attractive:

1. Get pre-approved for financing: Before you make an offer, make sure you have your financing arranged to make the process smoother and more attractive to the seller.

2. Make a larger down payment: Offering a larger down payment shows that you are committed to the purchase and can make your offer more attractive.

3. Offer a shorter closing timeline: Offering a shorter closing timeline can make your offer more attractive to a seller who wants to move quickly.

4. Offer to pay closing costs: Offering to pay closing costs can help make your offer more attractive, as it can save the seller a lot of money.

5. Make a longer escrow period: Offering a longer escrow period can give the seller more time to find a new home, which can make your offer more attractive.

6. Offer a rent-back agreement: If a seller needs time to move out after the sale, offering a rent-back agreement may make your offer more attractive.

7. Offer a home warranty: Offering a home warranty can add peace of mind to the seller and make your offer more attractive.

Scott Allen · Answer

@Gurjot Grewal

Try to keep your offers limited to a 7 day inspection, they can be contingent upon financing if you already have a pre-approval letter (the property will need to go through the appraisal process, so if it appraises under the purchase price that you're offering - you can renegotiate to the appraised value, come out of pocket to cover the difference, or terminate the deal due to a short appraisal - just don't waive the appraisal contingency), 1-2% earnest money will show the seller you're serious (have that held with the title company), and a 30-35 day close. It's easier to use these terms off-market but I use them on market all the time as well unless it's very competitive and an inspection or walk-through needs to be done prior to going into contract to waive the inspection to win.

Tenants need a minimum of a 24 hour notice to enter their unit for either an inspection, walk-through, or appraisal. Skip that term and make sure to get as much done during the 7 day inspection period incase you need to renegotiate during that time frame.

40 offers is a lot of offers. Only lowball if something has been sitting for more than 30 days - you might be able to get a counter out of the seller to see their bottom line. Otherwise, be more reasonable with your offers.

If you're going to go all cash on a property in Columbus - it's more common with A and B class properties unless you're a commercial fund that does a lot of flips.

Best of luck

Samuel Meyler · Answer

Are you using MLS template forms for your offers? Consider consulting with an attorney and having them draft you a blanket feasibility contingency that covers everything you need to terminate in one contingency. You can protect yourself while also simplifying your offer, which buyers may perceive more favorably than including multiple contingencies.

Remington Lyman · Answer

It is me

Bob Stevens · Answer

So, then FINANCING is not a contingency. I do all my business in the Cleveland markets, its as competitive or more then Columbus. Issue is you are using a realtor that is NOT where the deals are, and you are not cash. These two factors are what is preventing you from getting deals. I can get as many as I want for the prices I want as I am always cash "AS IS " close as fast as title can close. NO contingency. that's the key

All the best

Gurjot Grewal · Answer

@Bob Stevens

@Caleb Brown

I am pre-approved with multiple lenders and include the letter of the one I plan on using with all my offers.

@Bob Stevens  Some listed some off market. My agent brings me off market deals but my market seems very competitive. Its in Columbus Ohio.

Rick Albert · Answer

The unrestricted access is a little much since many contracts already state that within a certain period of time.

Have everyone you need come through during the inspection phase to keep the offer clean.

Have you explored aged listings? Properties that have been sitting on the market. They are going to be more flexible on price and terms.

Leo R. · Answer

@Gurjot Grewal  also, why does your agent think the offers are being rejected?

If your agent is even halfway decent, they should have some insight on this, and should be able to help you strategize how to improve your offers.  If your agent can't help you do this, then it may be time to look for a new agent...

Keep in mind: your agent should be doing everything in their power to help you figure out how to get a property under contract--particularly in this market, where many agents are hungry for business because they've suffered a serious downturn in contracts.  If they're not doing everything to help you get a property under contract, then either you aren't a priority to them for some reason, or they're not a good agent.

Good luck!

Leo R. · Answer

@Gurjot Grewal your contingencies seem reasonable to me, given that you include the pre-approval info in your offer...I would not necessarily suggest dropping any contingencies until you have a better idea of WHY your offers aren't being accepted (at this point, it sounds like you're not sure whether they're being rejected because of the contingencies, or because of some other reason).

You mentioned you live in Canada, but it sounds like you're making offers on property in the U.S?

This is a topic I don't know anything about (because I've never tried to buy a property outside my country), but I'm wondering if the sellers know that you're in Canada, and whether that would potentially turn them off?  ...is there anything that the sellers receive that indicates that you're in Canada?  ...if so, does your agent have any sense as to whether this might turn them off from your offer?

All things being equal, I would think that a seller would prefer to sell to a US buyer than a buyer in another country.

(Again--this is WAY outside my area of expertise, and I don't know anything about the legal aspects of sales to a buyer outside the US, so it's just a total shot in the dark).  ...but I'm interested to hear your take on it...

Good luck out there!

Do I have too many contingencies in my offer?

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