Contingencies Creep Back Into Contracts

It was more than three years ago that San Francisco real estate market activity prompted me to write about what buyers need to know when waiving contingencies in a purchase contract. We’d finally dug our way out of the financial meltdown, and buyer competition for properties was on the rise.

Besides paying high prices to “win” properties, buyers were waiving appraisal, loan and inspection contingencies to make their offers more attractive to sellers. That meant that buyers were prepared to risk their deposit (3% of the purchase price) if they couldn’t get their loan or couldn’t cover an appraised value shortfall. And they worked around having inspections during escrow, either by relying on seller reports, having pre-inspections or having none at all.

Homeowners have been enjoying their share of “sure thing” offers—until lately.

It’s no secret that the market is changing, particularly where condos and TICs are concerned. My last few transactions had contingencies, and I’m also hearing my colleagues talking about offers they’re writing or receiving that have one or more of those traditional sale conditions.

More interestingly, I’m hearing anecdotes of sellers accepting offers contingent on buyers selling their property before being able to complete their purchase. I had a listing earlier this year involving that contingency, and it worked out well. It just took a bit longer to close the sale, but my seller client received a price that made her very happy.

It bears mentioning that 60% of the condos, 67% of TICs and a little more than half of the single-family homes on the market have been sitting for 21 days or more. Granted, that inventory falls into the $1,500,000+ price range for houses and condos. But those numbers are making me think that there are quite a few sellers out there who’d love to get an offer on their property, with or without contingencies.

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Get in touch:

Eileen Bermingham

Corcoran Global Living

415.823.4656

eileen@insidesfre.com

DRE# 01352627

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