Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
17y
It often depends on who the seller is. If the seller is desperate, and you're pretty sure they want your offer, go ahead and put a "due diligence" contingency into the contract. This will give you a fixed amount of time to do your inspections (including termite inspection) and then back out of the contract for any reason, should you not be happy with the results.
Other contingencies you might consider are for financing (you can back out if you don't get your preferred financing) and appraisal (if the house doesn't appraise for the purchase value, the seller must drop the price to the appraised value).
Keep in mind that every contingency you stipulate makes your offer weaker, especially with less motivated sellers. So, don't put them in there just for the fun of it.
Lastly, if you're dealing with banks (REO properties), due diligence contingencies are pretty standard, but financing and appraisal contingencies will make your offer much weaker.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
17y
It often depends on who the seller is. If the seller is desperate, and you're pretty sure they want your offer, go ahead and put a "due diligence" contingency into the contract. This will give you a fixed amount of time to do your inspections (including termite inspection) and then back out of the contract for any reason, should you not be happy with the results.
Other contingencies you might consider are for financing (you can back out if you don't get your preferred financing) and appraisal (if the house doesn't appraise for the purchase value, the seller must drop the price to the appraised value).
Keep in mind that every contingency you stipulate makes your offer weaker, especially with less motivated sellers. So, don't put them in there just for the fun of it.
Lastly, if you're dealing with banks (REO properties), due diligence contingencies are pretty standard, but financing and appraisal contingencies will make your offer much weaker.
Real Estate Consultant · Minneapolis · Member since 2009 · 60 posts · 8 votes
17y
Today's bargain priced REOs are getting multiple offers - sucessfull bidders are making offers with NO contingencies. Bank mediators want to sign the offer and know it's a good sale - so they can move on the next 100 properties. If you offer cash with no inspection contingency - you may get the property at a lower price - then other offers full of contingencies.
Learn how to inspect properties yourself - then decide if you really want the property before making an offer.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
When dealing with REO properties, as Tim said, the least amount of contingencies the better and all cash beats out financing contingencies.
However, other potential purchases from private sellers should be made with inspection contingencies. Don't pay for termite or home inspections prior to having an executed PSA ever! Y9ou are just throwing money away.
I actually ask for a very short inspection period with REO's but I also offer all cash with large earnest money deposits, payable within 5 days of contract acceptance, and a short inspection period with a quick close immediately after.
Rental Property Investor · Chandler AZ and Sylvania, OH · Member since 2009 · 708 posts · 561 votes
17y
On properties I really like, I sometimes put a contingency that allows me to up my offer in case a higher bid comes in. I haven't ever had it come into affect and would hope that I never does get used.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
Why would you ever consider this? If you make an offer and it gets accepted, you have it locked up, who cares if higher offers come in, they are out of luck unless you choose to exit the contract via one of your contingencies.
Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
17y
Most well priced REOs will come back asking you to counter with "highest and best" anyway... I agree that the "increase my offer" contingency doesn't make much sense.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
17y
Originally posted by Stone Jin:
On properties I really like, I sometimes put a contingency that allows me to up my offer in case a higher bid comes in.
Keep in mind that the contingency is only binding if they formally accept your offer, and if they formally accept your offer, there is no need for a contingency about other offers coming in!
What I'm saying is that this contingency is absolutely useless, as it could never come into play.