Author Topic: Waiving all contingencies on an offer the norm?  (Read 851 times)

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Offline Kick53rv3

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Waiving all contingencies on an offer the norm?
« on: June 21, 2021, 12:25:41 PM »
We are writing an offer now for a 2014 property in Irvine and our agent advised us to waive all the contingencies if we can as it is the normal these days.

Loan I kind of get since we are approved for about 10% higher than what our offer is.

Appraisal seems fine too as another house down the street sold for about 5% lower a month ago, we are putting 30% down so even a lower appraisal shouldn’t affect the loan.

The one I am not sure about waiving is inspection, it sounds like a 2014 house shouldn’t have big enough issues to warrant backing out after inspection, but are we stupid to waive it just in case?

Offline Cares

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Re: Waiving all contingencies on an offer the norm?
« Reply #1 on: June 21, 2021, 01:09:30 PM »
I wouldn't say waiving inspection is the norm down in this market. Shortened inspection like 5-10 days is most common. It is the norm in the Bay Area though to waive physical inspection. If your agent is adamant about you waiving physical then he isn't looking out for your best interest.

I think appraisal waived is fine and I'm getting more and more purchase loans getting PIW too. Waiving loan is case by case but I can clearly tell if my loan file is going to have any road bumps or not. If you're fully underwritten and all conditions mostly cleared then it's easy to advise waiving loan.

Offline daedalus

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Re: Waiving all contingencies on an offer the norm?
« Reply #2 on: June 21, 2021, 02:15:45 PM »
are we stupid to waive it just in case?
No more stupid than the market itself, IMO.  I wouldn't do it, but then I guess I don't want it bad enough and would live with not having my offers accepted.

Offline USCTrojanCPA

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Re: Waiving all contingencies on an offer the norm?
« Reply #3 on: June 21, 2021, 02:19:07 PM »
We are writing an offer now for a 2014 property in Irvine and our agent advised us to waive all the contingencies if we can as it is the normal these days.

Loan I kind of get since we are approved for about 10% higher than what our offer is.

Appraisal seems fine too as another house down the street sold for about 5% lower a month ago, we are putting 30% down so even a lower appraisal shouldn’t affect the loan.

The one I am not sure about waiving is inspection, it sounds like a 2014 house shouldn’t have big enough issues to warrant backing out after inspection, but are we stupid to waive it just in case?

You do not want to waive all of your contingencies right off the bat because that means that your deposit is fully at risk once you wire it over to escrow.  What I have done for my buyers in these crazy times is waive the appraisal and loan contingencies right off the bat and then state that we would remove all contingencies in 10-14 days.  You want to make sure that there aren't any deal breakers with the home through your home inspection before your waive all your contingencies (that's my advice to you).  I know there are some transactions where buyers waive all contingencies right off the bat but that is very rare, even in this market.  Remember, it is your deposit that would go at risk if you waive all your contingencies right off the bat and not your agent's money. 
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Offline sleepy5136

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Re: Waiving all contingencies on an offer the norm?
« Reply #4 on: June 21, 2021, 05:29:55 PM »
I would be very concerned if your agent is telling you to waive all your contingencies off the bat. Keep in mind it's your deposit and you will be the one living there if anything needs to be addressed after closing.

Offline USCTrojanCPA

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Re: Waiving all contingencies on an offer the norm?
« Reply #5 on: June 21, 2021, 06:11:21 PM »
I would be very concerned if your agent is telling you to waive all your contingencies off the bat. Keep in mind it's your deposit and you will be the one living there if anything needs to be addressed after closing.

I only had one buyer that waived all contingencies right off the bat and it was against my advice, but luckily it worked out for them and they got the home.  I outlined all the risks of that decision so they were ready for the worst case scenario.
Martin Mania, CPA
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Offline Slevinkelevra

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Re: Waiving all contingencies on an offer the norm?
« Reply #6 on: June 25, 2021, 09:45:59 PM »
Regardless of how the current market is and combined with the lack of supply I would never waive a home inspection.  It’s like buying a car without looking at it in person and test driving it, yet significantly more expensive.  As sleepy5136 mentioned, being encouraged to waive the inspection is not in your best interest.  A significant issue could cost you a tremendous amount of money in the future.

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Re: Waiving all contingencies on an offer the norm?
« Reply #7 on: June 25, 2021, 09:54:23 PM »
I did a loan for someone in the Bay Area where it is normal to waive inspection contingency. She has closed on her home for 8 months now and has not been able to move in. She had to tear down a significant portion of her home and rebuild it due to major issues found after the fact. I would advise against removing loan contingency. I would much rather offer a higher price but be able to keep my contingency.

 

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