We have been advised to waive contingencies when we make an offer here in Seattle. Is this the norm in this market?
Welcome to the Seattle market. Don’t forget to add an escalator clause to your offer as well!
@Nikolas Katigbak Yes, unfortunately this is an incredibly tough market to purchase in. My son is currently competing with you for those few homes available!
Sellers are looking for the most sure deal, contingencies put that in question. You will need to do your due-diligence prior to submitting your offer (which will likely be aprox $100k over asking). This means you will have to get your inspection completed in advance, have underwriting complete on your financing (make sure your dealing with someone who can close quickly 15-20 days), and put down at least 5% earnest money which will be nonrefundable if you win the bid.
I've dealt with tough markets but this is about the most competitive I've experienced. With summer gone, there are fewer homes available yet still many purchasers which continues to drive prices up about 1%/month. ...And no, a softening of this market is not in the foreseeable future.
@Nikolas Katigbak in hot markets that is often the case. Just because that kind of offer is the temporary norm in a hot market, that does not mean you should do it. Are you in a positions to lose your Earnest money deposit? Is buying into a hot market the right play for you now? I know I don't want to do that.
Are you buying a home to live in or an investment property? I normally buy and sell investment properties with no contingencies. If you can't asses the repairs needed without an inspection clause you are probably to new to be buying the kind of serious rehab properties I sell. If you are not confident enough that you can come up with the funds for closing then I don't want to sell to you.
In a hot market perhaps the best approach is look for off market deals.
It's only advised if you want to have a chance of your offer getting accepted ;-).
But obviously, that means you want to feel confident that you can deal with any problem that is likely to arise. One gets pretty good at "self inspecting" too. I recommend a book like "The Confident House Hunter", written by an inspector here in Puget Sound actually. You start to realize you can figure a lot out on your own during a walk through, in case you have to move fast (which is more often than not).
Also, waiving the financial contingency is pretty much the norm in the hyper competitive local markets. As I just advised a friend of mine, "Waiving the financial contingency doesn't mean you can't have a loan (a common misconception)...it means you have to either a) have the cash if the loan doesn't come through in time and/or b) be prepared to lose earnest money if your bank doesn't execute."
As others have mentioned, Seattle isn't the only place. We just sold our primary residence out in the Boston area to move here. We had ~10 offers and only seriously entertained the 3 or 4 that waived all possible contingencies (all kept the financing contingency).
In a hot seller's market, you're courting the seller, not the other way around. They're probably receiving multiple offers, some of them above asking price. Any contingencies, concessions, etc. will make your offer less attractive and will possibly result in the seller going with someone else.
Even the financing could make a difference. An FHA loan is not as solid as a conventional one because there are more hoops to jump through with FHA that could delay closing. Cash offers are the best, of course.
In your market, I would not ask for any contingencies or any closing cost assistance. But I would not give up on the option period. You need the opportunity to inspect the property to make sure there is nothing going on that will require a huge amount to correct.
Common in Seattle, at this time. Make sure you have a good Broker who understands each contingency you are waving. There are specific forms you need to ensure are in place. With your lender, have them fully underwrite your file.
in a crazy strong seller's market, you want to do whatever you can to strengthen your offer. So when you're tapped out on offer price, you gotta make those terms as attractive as possible, this mean few, if any contingencies. Sellers in Seattle know they'll get multiple, all cash offers within hours. So why bother with someone using an FHA loan who also wants closing in 60 days and a 10 day inspection period?
This massively increases the risk to the buyer, but it's been hard to lose money in Seattle real estate for a while now.
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