Contingencies
- Thread starter ip
- Start date
irvinehomeowner
Well-known member
I think it depends on the product.
If there is a waitlist and homes are moving, no contingencies... but if they have standing inventory, are lowering prices and no one is buying (cough Quinterra cough), they may accept contingency (and by contingency, I mean already actively listing your home or your home is already in escrow to be sold).
If there is a waitlist and homes are moving, no contingencies... but if they have standing inventory, are lowering prices and no one is buying (cough Quinterra cough), they may accept contingency (and by contingency, I mean already actively listing your home or your home is already in escrow to be sold).
usctrojancpa
Well-known member
What contingencies in particular are you asking about? Loan? Sale of your existing home?
sgip
Well-known member
You still have to go through the PQ process with their preferred lender, contingent or not.
It's too bad most builders won't take contingencies and even more surprising that they don't employ a partner agent to help re-sell a buyers home. Given market conditions that seems like a nice way to grow the bottom line without much risk or investment involved by the builder.
I've seen some eager buyers force a PQ by taking a loan they didn't want (5/1 ARM vs 30 Fixed), getting a gift letter or showing a 401k statement that they never intend to touch, and since their departure residence was pushing up debt to income ratios, I'd get pledges that the buyer would move out and rent their home to provide a rental history acceptable to eliminate house debt from ratios. Lenders often need to show 3 months of rental income receipt to use that income. If the new build home will take 6 months to be completed, some buyers are going to be able to pull this off by selling their home before COE on the new one.
That said, by month 2-3 these buyers needed to decide if they were going to go forward or not. Most never asked about if a deposit on the home was at risk if they said they were really in fact contingent. Once upgrade deposits were needed is when cancellation rates would spike. The process of making oneself non-contingent is a real headache for builders which is partly why they have preferred lenders to sniff this out prior to contract writing. It still happens though.
It's too bad most builders won't take contingencies and even more surprising that they don't employ a partner agent to help re-sell a buyers home. Given market conditions that seems like a nice way to grow the bottom line without much risk or investment involved by the builder.
I've seen some eager buyers force a PQ by taking a loan they didn't want (5/1 ARM vs 30 Fixed), getting a gift letter or showing a 401k statement that they never intend to touch, and since their departure residence was pushing up debt to income ratios, I'd get pledges that the buyer would move out and rent their home to provide a rental history acceptable to eliminate house debt from ratios. Lenders often need to show 3 months of rental income receipt to use that income. If the new build home will take 6 months to be completed, some buyers are going to be able to pull this off by selling their home before COE on the new one.
That said, by month 2-3 these buyers needed to decide if they were going to go forward or not. Most never asked about if a deposit on the home was at risk if they said they were really in fact contingent. Once upgrade deposits were needed is when cancellation rates would spike. The process of making oneself non-contingent is a real headache for builders which is partly why they have preferred lenders to sniff this out prior to contract writing. It still happens though.